Alphabet Inc. is poised to record another significant paper gain following a recent tender offer by SpaceX that values the company at approximately $800 billion. The insider share sale was reportedly priced at $421 per share, indicating a substantial increase in valuation compared to prior secondary transactions. This change is expected to elevate the carrying value of Alphabet’s long-term investment in SpaceX, which it has supported since at least 2015 when it participated in a $1 billion funding round alongside Fidelity Investments, acquiring about a 10% stake.
Google’s parent company has not disclosed specific details regarding its private holdings, and a representative declined to comment on the matter. Earlier this year, Alphabet experienced a similar financial uplift when an $8 billion unrealized gain, tied to its investment in SpaceX, contributed to its earnings surpassing Wall Street expectations for the March quarter. This gain was attributed to a tender offer that valued SpaceX at around $350 billion.
Alphabet typically categorizes changes in the valuation of its private investments under “unrealized gains on non-marketable equity securities.” With the new tender implying an even higher valuation for SpaceX, investors are anticipated to closely monitor Alphabet’s upcoming earnings report for further financial impacts stemming from this latest valuation adjustment.
Why this story matters: The significant paper gain showcases the robust growth and potential of private tech investments in public company valuations.
Key takeaway: Alphabet’s long-term investment strategy in SpaceX has led to substantial unrealized gains, influenced by SpaceX’s rising market valuation.
Opposing viewpoint: Some analysts may argue that reliance on private market valuations can lead to volatility and discrepancies in reported earnings.
