LIVE MARKETS-Are the stars aligning for SpaceX?

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ARE THE STARS ALIGNING FOR SPACEX?

Elon Musk reportedly wants SpaceX to go public in mid-June around the time of his birthday (June 28) and the rare alignment of Mercury, Venus, and Jupiter earlier in the month.

According to Jessica Rabe, co-founder of DataTrek Research, this will likely be the biggest listing in history, but that’s largely due to SpaceX’s low-Earth orbit satellite internet service, Starlink, as opposed to its flashier space exploration pursuits.

SpaceX’s breakthrough technology of reusable rockets remains the key to Starlink’s success, since the company can send satellites into low Earth orbit at much lower costs than employing one-use rockets.

As Rabe sees it, "much of SpaceX’s massive valuation stems from Starlink following the classic disruptive innovation playbook by leveraging breakthrough technology (reusable rockets), starting at the low end of the market (residential consumers), and scaling up the value chain (to enterprise and others) from there."

In DataTrek's view, Starlink is a long-term threat to a variety of global telecom and cable companies, although expanding Starlink’s addressable market and competitive moat will continue to hinge on advancements in SpaceX’s disruptive rocket technology.

That said, Rabe also believes a SpaceX IPO will likely weigh on Tesla’s stock by offering public markets access to another company run by Elon Musk, diminishing TSLA’s value as the only pure-play on this front.

This is because she says most of Tesla’s value comes from its prospects in robotics, artificial intelligence, autonomous driving, and other technologies that Musk has promised to deliver.

"While he also has lofty goals for SpaceX, the company has a very strong business model and competitive positioning right now. SpaceX has a near-monopoly in reusable orbital launches, recurring global revenue, and is deeply entrenched with the US government and defense. By contrast, Tesla operates in a competitive, consumer-driven market with greater cyclicality and margin pressure," writes Rabe.

(Terence Gabriel)

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