Israeli institutional investors are participating on Thursday in SpaceX’s IPO, which has already seen strong demand, joining other long-term investors managing assets totaling around $1 trillion. Some institutions, however, declined to be identified, citing the confidential nature of their investment decisions.
In recent years, Israeli institutional investors have become active participants in major Wall Street IPOs. For example, Migdal and Clal invested $170 million in Anthropics’ May offering, which valued the company at $900 billion. Migdal views SpaceX as a unique combination of an established technology company and future growth engines.
“From our perspective, this is a technology company with multiple branches, some of which are mature and profitable, like Starlink, and others based on breakthrough technology that could, within a few years, take the company to amazing heights and significantly boost results, like Starship,” said Yuval Bar-Evan, head of investment peers at Migdal. “Elon Musk is one of the most brilliant entrepreneurs in the world, with proven ability to develop breakthrough technologies.”
A very unique company
Bar-Evan believes that despite questions around valuation, there is a place for a company like SpaceX in investment portfolios. “We think there is room for such a company in portfolios, both passively through exposure to tech indices and the S&P 500, and directly, of course in the right proportion,” he said.
He noted that pricing the company is especially complex. “It’s certainly difficult to price companies where a significant part of their value is based on a dream whose probability of success is unclear. But given the maturity of the technology and the quality of the entrepreneur, a significant valuation for the company is justified. Is a sales multiple of 80 or 120 correct? Hard to say. It’s not an exact science.”
Bar-Evan emphasized that SpaceX is highly unique, with three main operational engines. “One of them is already profitable today and has almost monopolistic characteristics — Starlink. The other two still require significant investment, but the company has an advantage in both that is extremely hard to compete with.”
“SpaceX is an asset many want to hold, which is why some investors are willing to pay a premium,” explained an institutional investor who requested anonymity. “There aren’t many companies in the world capable of providing global communications independent of geography while also conducting space launches. It’s a very rare combination of capabilities. Even if we don’t participate in the IPO itself, the company is very likely to enter leading U.S. indices. Therefore, every institutional investor must understand it in depth, because eventually it may reach portfolios via indices. This company has significant potential to unlock value over time, despite the IPO price.”
The main challenge, he added, is not evaluating whether SpaceX is a quality company, but pricing it. “We’re talking about a valuation that resembles the largest companies in the world, even though significant parts of its operations are not yet profitable. Part of the company’s valuation comes from investors’ belief in Musk’s ability to turn today’s investment-stage activities into globally scaled, profitable businesses in the future.”
Structural advantages and growth potential
TEMA, which manages the NASA ETF and holds exposure to SpaceX while it remains private, highlighted the company’s structural advantages. “Few companies have managed to build such standout advantages in engineering excellence, scale and execution,” said Yuri Khodjamirian, the firm’s chief investment officer. He noted that high industry entry barriers make SpaceX a “gateway to space,” capable of prioritizing payloads and gaining an edge over competitors.
Launch costs have fallen by 90% over the past decade, largely thanks to SpaceX innovation, opening new markets. “Investors tend to focus on rockets and the group’s AI activity, but Starlink is underappreciated,” Khodjmirian said. “We see three businesses in SpaceX: space, connectivity, and AI. Rockets capture public imagination and Grok (X’s AI, formerly Twitter) draws attention on the AI side, but connectivity remains undervalued. In our view, Starlink alone could support a significant portion of SpaceX’s market value.”
Despite the surge in valuation, he sees substantial growth potential. “The space economy is still in a very early stage of development. In the last decade alone, launch costs have dropped about 90%, largely due to SpaceX’s innovation, opening the door to new markets. Short-term uncertainty always exists, but the long-term opportunity looks stable and promising,” he concluded.