SpaceX’s leadership team will split the company’s stock, now valued at over $100 billion in total, on a 10-for-1 basis. Stock splits are cosmetic, though, meaning that the value of the stock is not changing — just the “per share” price.
For every share of SpaceX that an investor owns, that number will multiply by the number ten. Therefore, an investor who currently owns 100 shares will soon own 1,000 shares overnight. Of course, the market adjusts by pricing the stock at a quotient of 10; so if the stock once sold for $560 per share, it will now sell for $56 per share. The value didn’t change whatsoever, just the overall numbers.
“The split has no impact on the overall valuation of the company or on the overall value of your SpaceX holdings,” a company-wide email to SpaceX employees said.
Why would a company like SpaceX split its stock?
Publicly-traded companies perform stock splits when their growth begins outpacing their accessibility to investors. Investment money is the lifeblood of the stock market, as well as our nation’s leading indicator of economic health and confidence in the economy, quite often. Institutional investments like banks or hedge funds will not take much notice at the news of a split. But smaller investors will be more likely to buy a $56-per-share stock than one in the hundreds of dollars. In other words, the move makes sense at both a public relations level and a fiscal one.
Companies split stocks all the time, but this is the first such split for SpaceX, according to insiders. The company’s valuation has soared recently since SpaceX has raised billions of dollars to fund two capital-intensive projects: the “next generation” rocket Starship and a global internet network of satellites called Starlink.
Global internet is coming with Starlink
Starlink aims to provide an internet source for citizens across the globe based on a network of satellites, rather than any local infrastructure like fiber wire or telephone poles. If the innovative internet solution works as advertised, users could receive perfect internet access from any point on the globe one day — whether stranded at sea or lost in the backroads of some country. Starlink would also help facilitate reconstruction efforts for victims of natural disasters if the elements knocked out connectivity, which happened most recently in the island nation of Tonga.
SpaceX recently unveiled a new tier of the internet package meant to provide such service in exactly those harrowing circumstances. The company quietly announced its “premium” tier earlier in the month, which they’ll sell for five times the cost of the standard service. Starlink Premium requires a $500 refundable deposit and a $2,500 fee for the antenna and router. The service costs $500 per month.
“Starlink Premium has more than double the antenna capability of Starlink. It delivers faster internet speeds and higher throughput for the highest demand users, including businesses,” the SpaceX website said.
The first premium deliveries will begin in the second quarter of 2022.