Space Exploration Technologies Corp - Class A

We continue to be amazed by aggregate capital expenditure (capex) for AI infrastructure, and the availability of capital to fund it. In the past quarter, among many other capital raises in the public and private equity markets, we have seen Space Exploration Technologies (SpaceX) launch a US$86 billion IPO (initial public offering), quickly followed by a US$25 billion bond offering. The availability of capital for the longer-duration opportunities means that more ambitious business plans are possible. Investors implicitly believe that the capex will lead to new addressable markets with defensible moats.

Space Exploration Technologies Corp. (SpaceX) is a high-profile company focused on developing and launching advanced, reliable, and reusable rockets that drive down costs to access space. The company is generating significant value with the rapid expansion of its Starlink broadband service, reporting substantial growth in active users. SpaceX's recent successful completion of the largest initial public offering in history, raising over $85 billion, is expected to accelerate growth across massive addressable markets such as connectivity and AI. We believe the company is only just getting started.

Space Exploration Technologies, or SpaceX (SPCX), had a successful IPO in June, but we are skeptical about its $1.75 trillion valuation. The market seems to be engaging in speculative behavior, and we question the sustainability of such a high valuation given the company's expected multi-year negative cash flow. We doubt that the potential future revenues, even if optimistic, justify the current market capitalization. The IPO may mark a speculative top in the market, and we are cautious about the long-term prospects of SPCX.

Our privately-held shares in Space Exploration Technologies (SpaceX) increased in value following the company’s IPO, reflecting strong investor demand and optimism regarding the company’s future growth potential. This positive performance aligns with our focus on owning high-quality franchises with durable competitive advantages, often supported by secular tailwinds. We believe that SpaceX's growth trajectory is indicative of broader trends in the market, particularly in sectors driven by innovation and technology.

The team also added Space Exploration Technologies. It holds a leading position in commercial launches with a growing presence in satellite broadband, supported by cost advantages and scale derived from its integrated model. This structure underpins a durable competitive position with an expanding base of recurring connectivity revenues.

Space Exploration Technologies Corp. develops and launches advanced rockets, satellites, and spacecraft, with the long-term goal of making humanity multi-planetary. Shares rose as the company successfully completed the largest initial public offering in history, raising more than $85 billion. The proceeds are expected to accelerate the company’s growth across multiple massive addressable markets, including connectivity, launch, terrestrial and space infrastructure, and AI. The company’s fundamental business momentum was further reinforced by its signing landmark compute hosting deals totaling tens of billions of dollars annually, including agreements with market leaders Anthropic and Google.

Space Exploration Technologies Corp. (SpaceX) has emerged as a standout contributor to the Fund's performance, being the largest holding and the largest overweight position versus the Benchmark. The company is recognized for its role as a launch and satellite broadband groundbreaker, which aligns with the transformative secular trends in space exploration and technology. The Fund's investment in SpaceX reflects a strong belief in its potential to drive long-term investment returns, particularly as the demand for AI infrastructure grows and space becomes a new frontier for large-scale compute.

Space Exploration Technologies Corp. (SpaceX) is a high-profile private company founded by Elon Musk, focusing on developing and launching advanced rockets, satellites, and spacecraft with the ambitious goal of making life multi-planetary. The company is generating significant value through the rapid expansion of its Starlink broadband service, reporting substantial growth in active users and regularly deploying new and more efficient hardware technology. SpaceX has established itself as a leading launch provider by offering highly reliable and cost-effective launches, leveraging its reusable launch technology. Furthermore, SpaceX is making tremendous progress on its newest rocket, Starship, which is the largest, most powerful rocket ever flown.

Space Exploration Technologies Corp. (SpaceX) is generating significant value through the rapid expansion of its Starlink broadband service. The company continues to successfully deploy a vast constellation of Starlink satellites in Earth's orbit, reporting substantial growth in active users, and regularly deploying new and more efficient hardware technology. Furthermore, SpaceX has established itself as a leading launch provider by offering highly reliable and cost-effective launches, leveraging the company's reusable launch technology. We value SpaceX using the prices of recent stock transactions.

We believe Space Exploration Technologies Corp. possesses meaningful brand equity and barriers to entry that equate to pricing power. The company operates in a large underpenetrated addressable market and is well financed with significant equity stakes by its founder-led management, giving us further conviction in our investment. We think it will continue to grow significantly and has the potential to generate exceptional returns over time.