Want to buy SpaceX stock? You have to know someone

Invites circulate via group chats, word of mouth and emails marked confidential. Investment vehicles providing access to Elon Musk’s closely held rocket and satellite company have generated hefty demand, and fees for those arranging them. For years, the company’s value has only gone in one direction—up.

Hawthorne, Calif.-based SpaceX—which flirted with bankruptcy not long after Musk founded the company more than two decades ago—now dominates the launch business.

And it has built its satellite-internet division, Starlink, into an industry and geopolitical force.

Current and former employees, venture capitalists and creators of SpaceX investing vehicles have all benefited from the intense investor appetite for the company. Gaining access to SpaceX shares can mean sizable costs. SpaceX also carefully tracks its investor base, and not everyone gets in.

As a private company, SpaceX isn’t required to report financial results. The Wall Street Journal reported last year that the company in 2022 doubled its revenue compared with the previous year’s total as Starlink gained customers, and global attention, for its role in Ukraine. Many investors are betting that growth will continue for years to come.

“You can argue about where it’s trading in terms of valuation, whether that’s the right place to buy. But there’s a whole lot of believers in this stock," said Glen Anderson, chief executive of Rainmaker Securities, which operates a marketplace where investors can trade investment interests in private companies such as SpaceX.

Investor demand has been a factor in SpaceX’s steadily climbing valuation over the past decade, providing executives and other staff the chance to cash out company stock at ever-higher prices. That is a benefit akin to programs used by publicly traded companies to attract talent.

It has also enabled SpaceX’s longer-term investors to mark up the value of their stakes, bolstering their portfolios’ performance.

SpaceX has raised $9 billion in primary funding over time, and investors who have participated directly in the company’s traditional funding rounds include blue-chip firms such as Fidelity and Alphabet’s Google. SpaceX hasn’t raised money for itself in a couple of years, a sign of its improving financial performance and strong cash position.

For many other investors, fresh batches of shares now often come from former and current SpaceX employees, who have the opportunity to sell during so-called liquidity events the company sets up. Securing access isn’t easy: Opportunities can bubble up informally, through phone calls or via online lists that don’t circulate widely, people familiar with the deals say.

Shares of SpaceX were valued at $97 each during the most recent employee stock sale, implying a $180 billion valuation for the company, according to people familiar with the matter. That was up from a $12 billion valuation in 2015.

Some of the strongest demand comes from wealthier people who meet financial requirements to purchase slices of special investment companies set up to hold SpaceX stock. Investors can also purchase interests in vehicles that own shares in those special investment companies—a nesting-doll effect.

Musk, SpaceX’s chief executive, has grappled with challenges involved in operating Tesla, the one public company he leads. At the electric-car maker, he has battled securities regulators and faced government probes.

In January, Musk lost a shareholder lawsuit over his pay package. Last year, he recommended that companies go public only if they absolutely need to.

Musk is both a draw and a risk for investors at SpaceX, according to investors and documents viewed by the Journal.A recent investment offering for SpaceX listed Musk as a factor they should account for. “Mr. Musk has become an increasingly public personality and makes public statements regularly, with many of those statements causing controversy," a document viewed by the Journal shows.Musk and a SpaceX spokesman didn’t respond to requests for comment.

“I think investors in SpaceX know exactly what they are doing. And they are lucky to be investors in SpaceX," said Tim Draper, a longtime venture investor and an early backer of SpaceX.

Hank Medina, an investor behind Litquidity who has been dubbed the “meme lord" of Wall Street, said in an interview that the syndicate sold about $2 million worth of exposure to SpaceX, or double its original allocation. The minimum check size to get in: $50,000.

In December, Litquidity Syndicate, an investment group that usually focuses on early-stage companies, emailed a list of investors, saying they had the chance to get access to SpaceX by purchasing interests in a special investment vehicle. That vehicle would be exposed to SpaceX shares through another investment vehicle, according to the email, a copy of which was viewed by the Journal.

Investors who bought access would pay a 4% management fee for the first year, split between two other firms involved in the deal. Litquidity itself would get 5% of potential future profits, with another partner taking 20%, according to the email. Medina said the fees partly reflected pent-up demand for SpaceX and investor conviction in the company.

“I wouldn’t have done this if I didn’t think there wasn’t more room to run," Medina said.

Demand for SpaceX-linked investments is part of how the rocket launcher ensures there are buyers for current and former employees looking to sell holdings. Still, SpaceX has worked to keep a tight grip on who ultimately owns its stock.

A Hong Kong subsidiary of Leo Group, a China-based company with businesses such as pump manufacturing and digital marketing, in 2021 said it contributed $50 million into a vehicle that would invest in SpaceX, according to securities and legal filings.

Shortly after Leo disclosed the investment in a securities filing in China, the investment vehicle’s managers moved to cancel the deal, according to a lawsuit the subsidiary filed in the U.S.

They sought to disqualify Leo’s subsidiary because SpaceX’s chief financial officer “was unhappy with media coverage of Leo Group’s disclosure of its investment in SpaceX," the lawsuit alleged.

The suit is pending in Delaware state court. Aaron Marks, a lawyer at Kirkland & Ellis representing the defendants, who have contended in court their actions were appropriate, declined to comment. Leo Group couldn’t be reached. Andrew Stern, a lawyer at Sidley Austin representing the Leo subsidiary, declined to comment.

SpaceX documents viewed by the Journal unrelated to the case say employees can’t transfer shares to other holders without company and board approval. Transfers to potential competitors, non-U.S. holders or entities the company considers unfriendly are unlikely to ever be permitted, according to the documents, which relate to a stock-purchase program.

SpaceX also says in the documents that it doesn’t plan to approve transfers of employee stock arranged through “any public posting, message board, trading portal, internet site or similar manner."

The company has another reason for keeping close tabs on its shareholder base: U.S. securities law.

Private companies are typically required to make periodic disclosures of their financial performance once they hit certain milestones, such as having more than $10 million in assets and 2,000 official owners. Those thresholds generally exclude so-called beneficial holders, or those who have an indirect interest in the company’s shares.

The regulatory limits are the reason SpaceX cannot offer stock to anyone who wants to buy it, Musk said on X last year.

SpaceX executives have spoken publicly about potentially spinning off Starlink as a public company, but they have also voiced confidence in their ability to continue cashing out staffers seeking money for their shares.

“I think the reason to take any company public is to give employees liquidity," SpaceX President Gwynne Shotwell told reporters at a conference in early 2023. But at SpaceX, “We have been able to give employees liquidity."

Emily Glazer contributed to this article.

Write to Micah Maidenberg at micah.maidenberg@wsj.com