SpaceX IPO: Successfully Disrupting the Aerospace Market

February 22, 2017 – 08:12 pm
SpaceX IPO
  • Aerospace service provider SpaceX is leading the efforts to enable low-cost commercial aerospace services.
  • The company has contracts with NASA to transport cargo to the ISS in the short run and U.S. astronauts in the long run.
  • Despite the valuation hike, SpaceX will be an attractive buy in case of an IPO.

Elon Musk’s Space Exploration Technologies Corporation, which is also known as SpaceX, is probably the entrepreneur’s most exciting initiative, and his other initiatives include electrical cars manufacturer and solar energy provider SolarCity (NASDAQ:SCTY), among others. SpaceX designs, manufactures, and launches rockets and spacecrafts providing low-cost space transport services. SpaceX is the ultimate leader in the private aerospace market as it succeeded not only in sending a spacecraft into orbit but also in launching a vehicle that provided supplies to the International Space Station (ISS).

SpaceX Revenue and Business Model

Supplying cargo to the ISS was not a onetime effort by SpaceX but part of the company’s $1.6B contract with NASA that was signed in 2008. NASA chose SpaceX to perform at least 12 missions to the ISS to provide cargo and supplies for the station; this contract may end up including additional missions on top of the cargo shipping and could rise to $3.1B. In 2014, NASA and SpaceX expanded their relationship further when NASA chose SpaceX for a very lucrative mission to develop, test and finally transport U.S. astronauts into space by 2017 and ending U.S. dependence on Russia. The 2014 contract is worth $2.6B for SpaceX and the company will be able to use the capabilities developed in this project for its commercial purposes later on.

Besides the NASA agreements and the government-funded projects, SpaceX provides some commercial aerospace services such as an aerospace rocket launch service, satellite launch service, and manned space travel. SpaceX vision is to offer rocket launch service powered by reusable rockets for relatively low prices that are expected to range between $5M and $7M per launch. SpaceX is also engaged in an ambitious project to deliver The Internet through satellites to areas which currently don’t have an internet connection. An internet connection from space that covers the entire world is tech companies wet dream. Google (NASDAQ:GOOG), , Microsoft (NASDAQ:MSFT) and other giants tried in the past to launch similar projects with balloons, antennas, and drones, but SpaceX solution could be the most realistic of all. The internet by satellite will require SpaceX to launch several thousands of small satellites that will orbit the earth and cover every piece of it.


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