Space Exploration Technologies Corp, or SpaceX, is one of the most exciting growth companies in the world. Unfortunately, everyday investors can’t buy shares in it inside our Stocks and Shares ISA portfolios.
That’s because founder Elon Musk is keeping the business private due to its underlying mission to colonise Mars and make humans a multi-planetary species. This isn’t going to happen in the next few quarters, making the mission-driven firm unsuitable to the shorter-term investing horizons on Wall Street.
Last year, SpaceX’s Falcon rockets made up more than half of the world’s 259 orbital launches. And recently, it tested its giant reusable rocket, Starship, for the seventh time. The second stage blew up, which highlights how challenging rocket science can be.
Still, its high-speed Starlink internet business now has nearly 7,000 satellites in its fast-growing constellation. The firm is aiming for 42,000, while boasting nearly 5m subscribers back on Earth. One of these is a friend of mine who recently installed a Starlink dish on his family’s camper van. It’s impressive stuff.
SpaceX’s valuation has ballooned to $350bn, making it the world’s most valuable private company. Investors can gain indirect exposure through Scottish Mortgage Investment Trust and Baillie Gifford US Growth Trust. Both now have SpaceX as their top holding.
Options to consider
According to McKinsey, the global space economy will be worth a massive $1.8trn by 2035, up from $630bn in 2023. How can investors grab a slice of this growing cosmic pie? There are a few options to consider.
One is Planet Labs, which is an Earth-imaging firm. There’s also Seraphim Space Investment Trust, a UK venture capital trust that invests in innovative start-ups that are leveraging space technology. Naturally, some of these young enterprises could fail.
Across the pond, there is space tourism firm Virgin Galactic, which was founded by Sir Richard Branson. This one is dicey as it’s currently building its next generation of spacecraft and generating no revenue. Looking ahead, it will have a hell of a job on its hands competing with SpaceX and Jeff Bezos’s Blue Origin.
Another stock is Rocket Lab. In contrast to SpaceX, this firm specialises in small satellite launches. Rocket Lab is still loss-making, which adds risk, but it is growing rapidly. In 2024, revenue is forecast to have grown 77% year on year to $434m.
More risk-averse investors might consider established defence companies that have growing space businesses. Examples include BAE Systems, Lockheed Martin, and L3Harris Technologies.
An intriguing candidate
One fascinating space stock to consider that has appeared on my radar is Intuitive Machines (NASDAQ: LUNR). This is a company with a $2.8bn market cap that makes lunar exploration and landing vehicles for NASA.
The stock is up 560% in one year!
The event that put rocket boosters under the share price happened in February when Intuitive Machines became the first private company to successfully land a spacecraft on the Moon. This achievement convinced NASA to award it a mega-contract worth up to $4.8bn to build a communications system between Earth and the Moon.
It’s worth pointing out that this is currently another loss-making business, so arguably carries higher-than-average risk. But it’s growing fast, with revenue tipped to hit $497m in 2026, up 525% from 2023.
