A SpaceX IPO Could Open the Door for More Investment Into Smaller Space Companies Like Rocket Lab and Planet Labs
In the past decade, everyday investors have had ample opportunity to get in on the ground floor of growth industries like electric vehicles and artificial intelligence (AI). However, so far it’s played out differently with space stocks. Sure, there have been a few space exploration companies that have gone public during this time frame, but the largest name in the space, Elon Musk’s SpaceX, remains private.
As a result, insiders and private investors have benefited from the start-up’s rise to a sky-high valuation. Meanwhile, everyday investors have stayed stuck on the sidelines. Still, this could soon change. SpaceX is expected to file for an IPO that would raise up to $75 billion and value the company at $1.75 trillion.
Moreover, while there is ample excitement among public investors to get in on a SpaceX IPO, the best move may be to capitalize on a possible indirect effect of a SpaceX IPO: greater attention and appreciation for the existing, smaller publicly traded space stocks.
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Why a SpaceX IPO changes the story for AST SpaceMobile, Rocket Lab, and others
If SpaceX goes public sometime soon, other names in the space could see a ripple effect, with bullishness for SpaceX spilling over into other space exploration stocks and exchange-traded funds (ETFs).
Key beneficiaries of this trend may range from telecom satellite stocks like AST SpaceMobile (ASTS +3.93%) to rocket stocks such as launch service provider Rocket Lab (RKLB +4.20%). Most, if not all, of these stocks base their current valuation on future potential.
Even so, if sentiment for space stocks becomes even more bullish following a SpaceX IPO, some or all of these additional names could make “to the moon” style moves.
An even more direct beneficiary
While the public debut of SpaceX could enable investors to discover or rediscover names like AST SpaceMobile and Rocket Lab, it’s important to note that there’s already one stock that could directly benefit from SpaceX going public.
EchoStar (SATS +3.79%), a satellite telecommunications company, is best known for its consumer-facing products like Dish pay-TV service and Boost Mobile wireless phone service. However, Echostar has been transitioning itself into a spectrum holding company, seeking to capitalize on its most important assets. The company has engaged in numerous spectrum sale transactions lately, including a $22.6 billion sale to AT&T and a wireless spectrum sale to SpaceX valued at $17 billion to $20 billion.
Today’s Change
(3.79%) $4.25
Current Price
$116.48
Key Data Points
Market Cap
$32B
Day’s Range
$113.52 – $117.70
52wk Range
$14.90 – $132.25
Volume
208K
Avg Vol
6.3M
Gross Margin
15.71%
What’s most interesting about the SpaceX deal is that it entailed EchoStar receiving a 2% equity stake in the hot start-up. Valued at around $11 billion today, implying a $550 billion valuation for SpaceX, at first it may be questionable whether this position can increase in value post-IPO. With Echostar shares rising over 52% in the past six months, the stock’s valuation may already reflect the value of this position, and then some. That said, this underscores the need and urgency to research these stocks now, ahead of SpaceX going public. Once this major event occurs, price discovery could happen in a flash, creating a small window to capitalize on this opportunity.
