Big Secrets Hiding Inside Big Businesses

Why You Should Always “Check Your Pockets”

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Table of Contents

• Why You Should Always “Check Your Pockets”

• Three Things To Know Before We Go…

Have you ever found a wad of cash in a weird place…?

I think “Oh man, I just found a bunch of money.” Then, of course, I realize: “Yep, it’s your money, dummy. You put it here 10 years ago and then you forgot about it. Now it’s worth half as much…”

Investing can sometimes be like that too. Sometimes you own a lot more than you realize.

In January 2015, Google (GOOG), now Alphabet (alongside Fidelity), invested $1 billion into SpaceX – Elon Musk’s private aerospace manufacturer. I doubt anyone noticed or cared. In that year, Google earned more than $15 billion. And it was holding almost $100 billion in cash on its balance sheet.

Meanwhile, after Google’s critical cash infusion, SpaceX completed the first (ever) successful landing of an orbital-class rocket. Over the next decade it completed 84 Falcon 9 booster launches and landings, allowing it to build the world’s first cost-effective, low-earth orbiting satellite constellation, Starlink.

Starlink provides wireless internet access to people around the world who otherwise have no good way to connect. Starlink’s user base continues to double annually – growing from 1 million subscribers in December 2022 to almost 10 million today. Starlink is, in my opinion, the single most valuable piece of global infrastructure ever created and, in time, will substantially reshape the way most people on earth live.

And Google’s stake? It went mostly unmentioned for a decade. I doubt any investors attributed much, if any value, to that 2015 investment. In fact, I’d bet that even today most investors don’t know that Alphabet is a shareholder of SpaceX.

But, suddenly, last April, Alphabet was required (by accounting rules) to disclose its SpaceX stake: then valued at $8 billion. Today, it still owns 7% of the company, which is rumored to be going public next year at around a $1.5 trillion valuation. That means Alphabet’s stake would be worth over $100 billion. That’s a 100x return in roughly a decade.

That’s a heck of a lot better than finding a small wad of cash in your pocket!