SpaceX made history over the weekend when it launched two U.S. astronauts into space, the first crewed space launch from U.S. soil in nearly a decade. It was a remarkable accomplishment, and one that should usher in a new era of space cooperation between private companies and NASA.
It also was largely a nonevent for investors, as SpaceX is a private company and founder Elon Musk has expressed an interest in keeping it that way. SpaceX has big dreams, including colonizing Mars, and those sorts of ambitions, and research expenses, don't usually sync well with Wall Street's quarter-to-quarter tracking.
But even if SpaceX isn't publicly traded, there are some options for investors who want to buy into the new space race. Here's a look at some of the options available to those who are interested.
There aren't a lot of large public companies focused solely on space; I'll get into why that is, and what it might suggest for investors later on. But there are a few options. Virgin Galactic (NYSE:SPCE), Richard Branson's space tourism venture, went public last year and has been the primary publicly traded beneficiary of SpaceX's recent success.
Image source: Getty Images.
Virgin Galactic has yet to launch a human into space, and the company is very much in its development phase. Virgin Galactic generated just $238,000 in revenue in the first quarter, but it can boast a reservation list of more than 1,000 people who have signed up to eventually pay $250,000 to briefly go into space.
The company hopes to begin service this year and believes that with repetition it can bring down the cost of its launches and become profitable. It had better, because even if the entire reservation list is converted into full-paying customers, the money raised wouldn't go much further than covering the $200 million Virgin Galactic burned through in 2019.
Another option is Maxar Technologies (NYSE:MAXR), which is focused on satellites, digital imagery, and analytics tools. The company is a rollup of a number of small satellite providers perhaps best known as the source of many of the satellite images used by Alphabet's Google Maps product, but it gets most of its revenue from government and commercial customers.
Finally, Aerojet Rocketdyne (NYSE:AJRD) is focused on providing the rocket engines needed to get astronauts and satellites into orbit and beyond.
All of the space pure plays tend to be smaller, niche companies. There is a reason for that. Space by its nature is risky, and expensive. SpaceX has experienced a number of high-profile mishaps on its way to getting an astronaut into orbit. Testing and failure are parts of the development process, and that can be hard for smaller companies to manage and finance.
A significant portion of the revenue related to space is soaked up by larger, more diversified defense contractors. Most defense titans have space units, with Boeing (NYSE:BA) and Lockheed Martin (NYSE:LMT) in a joint venture called United Launch Alliance (ULA) focused on lift and Northrop Grumman (NYSE:NOC) making rockets via its Orbital ATK acquisition. Those companies, as well as others, includingRaytheon Technologies (NYSE:RTX) andL3Harris Technologies(NYSE:LHX), also make satellites and sensors that are launched into orbit.
Image source: Lockheed Martin.
Although SpaceX is best known for its crewed efforts, the company so far has made its most significant impact in the launch business. Because it is private, we don't know the exact numbers, but SpaceX has succeeded in bringing down launch costs for government and commercial operators and has put pressure on incumbents including ULA and Northrop.
The real money in space comes from the manufacture of satellites, probes, and other objects designed to fly through space, and specifically the high-tech sensors and electronics on those objects, and not the rockets that get them there. That's a tough business to break into, especially since many of the launches are shrouded intelligence efforts that require employees with clearances, and at least for now are left largely to defense companies with strong ties to the Pentagon.
SpaceX appears to have no interest in going public, but management has in the past discussed eventually spinning off its planned Starlink internet service provider as a publicly traded entity. Starlink in the coming years plans to launch 12,000 small, low-orbiting satellites that can beam internet service to areas that are hard to reach by terrestrial offerings.
They aren't the first to try the plan: Viasat (NASDAQ:VSAT) and EchoStar's (NASDAQ:SATS) Hughes Network Systems currently offer satellite internet with various levels of success. Starlink is one of a number of next-generation companies that want to use an armada of small, inexpensive satellites instead of a couple of larger, more complex ones to provide service.
SpaceX in the past has predicted Starlink could generate upward of $30 billion in annual sales by 2025, though that appears to just be based on assuming all 12,000 satellites are utilized at maximum capacity. It could be a challenge to get to those sales numbers. The business will have to compete against incumbent satellite vendors, similar efforts funded by Amazon.comand others, traditional Earth-based providers, and new technologies including 5G wireless networking technologythat could solve the same problems without the costs and complexity of going into space.
In the meantime, the Starlink launches are providing a steady stream of business for SpaceX and helping advance the company's goal of establishing a space-based communications network that could be used in future efforts to get to the moon and beyond. But as a stand-alone business, Starlink still has a lot to prove.
As mentioned above, space is hard. It is also exciting, and over time, as these technologies develop, could be lucrative. Bankers at Morgan Stanleyin 2017 predicted the space industry could grow to as much as $1.75 trillion in annual revenue by 2040.
Motley Fool co-founder David Gardner likes to say, "make your portfolio reflect your best vision for our future," and it's easy to fit a world with space tourism, improved communications, and even moon colonies into that vision. Unfortunately, the complex engineering challenges needed to be tackled every day to launch people, and objects, into space inevitably lead to high costs and some business failures.
As an investor, it's OK to devote a small percentage of your portfolio to some of these pure-play space companies and hope for the best. But, as always, diversification is key. Given the risks associated with these businesses, it's dangerous to make space a key part of your retirement portfolio.
Read more:
You Can't Buy SpaceX Stock Right Now, but Here's How You ...
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- Starship launch: Third flight reaches space but is lost on re-entry - New Scientist - March 16th, 2024 [March 16th, 2024]
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- SpaceX successfully launches Starship but loses spacecraft while in orbit - News 13 Orlando - March 16th, 2024 [March 16th, 2024]
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- UPDATE 3: SpaceX launches NASA's PACE satellite with new capabilities to study climate, ocean and atmosphere ... - SatNews - February 9th, 2024 [February 9th, 2024]
- DID YOU HEAR IT? Sonic booms reported in Central Florida during return of Ax-3 crew - WKMG News 6 & ClickOrlando - February 9th, 2024 [February 9th, 2024]
- Ax-3 Astronauts Undock in Dragon from Station for Earth Return - NASA Blogs - February 9th, 2024 [February 9th, 2024]
- SpaceX targeting Feb. 14 for launch of Intuitive Machines IM-1 private moon mission - Space.com - February 9th, 2024 [February 9th, 2024]
- Mongolia discusses first national satellite with SpaceX - Developing Telecoms - February 9th, 2024 [February 9th, 2024]
- NASA, SpaceX, PACE in Florida: Where to watch Earth-science launch - Florida Today - February 9th, 2024 [February 9th, 2024]
- SpaceX rolls out Falcon 9 rocket to launch NASA's ocean-studying PACE satellite on Feb. 8 (photos) - Space.com - February 9th, 2024 [February 9th, 2024]
- Musk at center of sexual harassment fight with ex-SpaceX employees - The Seattle Times - February 9th, 2024 [February 9th, 2024]
- SpaceX to launch NASA's PACE ocean-monitoring satellite this week - Space.com - February 9th, 2024 [February 9th, 2024]
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- Ax-3 astronauts leave International Space Station in SpaceX Dragon, eye Friday splashdown - Florida Today - February 9th, 2024 [February 9th, 2024]
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- Sonic boom could hit Florida with SpaceX launch of NASA Earth science probe - Tampa Bay Times - February 9th, 2024 [February 9th, 2024]
- SpaceX Launches Ambitious PACE Mission to Monitor Global Ocean, Atmospheric Health - AmericaSpace - February 9th, 2024 [February 9th, 2024]
- UPDATE 3: Another bump in time as SpaceX delays launch of 22 Starlink smallsats SatNews - SatNews - February 9th, 2024 [February 9th, 2024]
- SpaceX applies for sea-based satellite earth stations - DatacenterDynamics - February 9th, 2024 [February 9th, 2024]
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- NASA's PACE mission underway with overnight launch of SpaceX Falcon 9 rocket - WFTV Orlando - February 9th, 2024 [February 9th, 2024]
- SpaceX launches NASA's PACE satellite to study Earth's oceans, air and climate - Yahoo News UK - February 9th, 2024 [February 9th, 2024]
- SpaceX shows of 4 giant Starship Super Heavy boosters (photos) - Space.com - February 9th, 2024 [February 9th, 2024]
- Weather Clears for PACE Launch PACE Mission - NASA Blogs - February 9th, 2024 [February 9th, 2024]
- SpaceX to launch Falcon 9 rocket Thursday night from Vandenberg SFB - Yahoo News - February 9th, 2024 [February 9th, 2024]
- WATCH AGAIN: NASA'S PACE spacecraft launches on Falcon 9 rocket from the Cape - WKMG News 6 & ClickOrlando - February 9th, 2024 [February 9th, 2024]
- Starlink Group 7-13 | Falcon 9 Block 5 - Everyday Astronaut - February 9th, 2024 [February 9th, 2024]
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- NASA's PACE mission underway with overnight launch of SpaceX Falcon 9 rocket - Yahoo News - February 9th, 2024 [February 9th, 2024]
- Ax-3 Astronauts Undock From Space Station in SpaceX Dragon for Earth Return - SciTechDaily - February 9th, 2024 [February 9th, 2024]
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- SpaceX gearing up to launch Intuitive Machines private moon lander in February - Space.com - February 5th, 2024 [February 5th, 2024]
- NASA names astronauts for SpaceX's Crew-9 mission to the ISS - Space.com - February 5th, 2024 [February 5th, 2024]
- Starlab commercial space station to launch on Starship - SpaceNews - February 5th, 2024 [February 5th, 2024]
- SpaceX launches private Cygnus cargo spacecraft to the ISS (video) - Space.com - February 5th, 2024 [February 5th, 2024]
- NASA and Partners Now Target Tuesday for Ax-3 Mission Departure - NASA Blogs - February 5th, 2024 [February 5th, 2024]
- Cygnus Cargo Ship Launching on SpaceX Rocket Live on NASA TV - NASA Blogs - February 5th, 2024 [February 5th, 2024]
- SpaceX: DOD Has Requested Taking Over Starship For Individual Missions - Aviation Week - February 5th, 2024 [February 5th, 2024]
- Musk took drugs with Tesla and SpaceX execs WSJ - Global Village space - February 5th, 2024 [February 5th, 2024]
- Watch SpaceX launch of NASA International Space Station cargo mission live on Tuesday - USA TODAY - February 5th, 2024 [February 5th, 2024]
- SpaceX wants to give some land to Texas Parks and Wildlife but ownership is unclear - Texas Public Radio - February 5th, 2024 [February 5th, 2024]
- SpaceXs Starship Rocket to Launch the Starlab Commercial Space Station - Via Satellite - February 5th, 2024 [February 5th, 2024]
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- Coverage of the Hatch Closing for the SpaceX/Axiom-3 Crew - NASA (.gov) - February 5th, 2024 [February 5th, 2024]
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- Starlabwith half the volume of the ISSwill fit inside Starship's payload bay - Ars Technica - February 5th, 2024 [February 5th, 2024]
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