Want to Invest in SpaceX? Here's How.
On Tuesday, both chambers of Congress passed a bipartisan bill approving funds for NASA and giving the agency a number of new mandates that will set the stage for space exploration, as well as investment opportunities in aerospace, over the next two decades.
When enacted, the bill will be the first to give the space agency new mandates in over six years. Its passing serves as a reminder that, even during times of stark political divide, the U.S. remains united in its extraterrestrial ambitions.
Dubbed the NASA Transition Authorization Act of 2017, the bill appropriates $19.508 billion to the space program, up a hair from $19.3 billion received in 2016. Relatively speaking, the number is small and works out to approximately 0.5% of the total federal budget.
The bill mandates a number of specific objectives such as sending a crewed spaceship to the moon, colonizing beyond low-earth orbit, sending a probe to explore the possibly life-inhabiting Europa (one of Jupiter’s moons), and hunting down potentially deadly asteroids (near-earth objects).
The real headline, though, can be found in section 435 of the bill, which prompts NASA to reach the next great milestone in space exploration: sending humans to the planet Mars by 2033.
This Generation’s “Space Race”
As far as this new space race goes, the U.S. has virtually zero competition from an international standpoint. NASA has had rovers exploring Mars as early as 2004, while China and Russia won’t even be attempting to land their first rovers until 2020.
Europe, meanwhile, has had zero successful landings on Mars versus seven for the U.S.
Yet while competition from international governments may be virtually nonexistent, NASA is not the only horse in this race. In fact, its ambitious manned trip to Mars is already years behind its biggest competitor, who wants to put humans on the Red Planet in less than 10.
In September 2016, Elon Musk, alongside his private space exploration company SpaceX, revealed plans to launch a manned mission to Mars as early as 2024. If the firm succeeds, that means a private company will have humans touching down on Mars nearly a decade before NASA intends to (the trip is expected to take about 18 months).
Unlike the 20th-century moonshot, which was a competition marked by contentious displays of national strength, this generation’s space race is setting up to be quite different. Instead of nation versus nation, this time it will be a battle, or better yet a cooperative venture, between public and private.
That’s because both SpaceX and NASA have come to rely on each other in recent years in a mutually beneficial relationship. SpaceX relies on NASA as a customer, while NASA relies on SpaceX as a supplier of cost-effective transport.
As of 2016, the official number on a SpaceX Falcon 9 launch was around $62 million ($90 million for the Falcon Heavy). This is already significantly cheaper than both the now-retired Space Shuttle and competing commercial launch providers.
As Business Insider reports, the cost to launch SpaceX’s Falcon 9 rocket can be as little as $9,100 per pound of cargo. That's compared to $43,180 per pound of cargo for Orbital Science’s (NYSE: OA) Cygnus spacecraft.
And by implementing reusable rocket stages, SpaceX believes it can cut costs even further, by as much as 30% per launch. This number may even be an underestimate, as analysts at Jefferies project a 40% cost reduction.
If all goes as planned, SpaceX will already be completing over 30 launches in 2017, nearly four times as many as were launched in 2016 and the most ever for a private space company. If anything is clear from this explosive demand for Falcon 9 launches, it’s that the age of commercial space is officially upon us.
For NASA looking to supply cargo to the ISS, and for satellite companies upgrading the constellations, the cost savings now being provided by the private sector are simply too good to pass up. Of course, NASA will continue to develop new launch and propulsion technologies, but it’s simply not competing on grounds of cost effectiveness.
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Investing in the Success of SpaceX
For many investors, this hints at quite the opportunity. Unfortunately, though, SpaceX is not a publicly traded company, and it won’t be any time soon.
Of course, Alphabet Inc. (NASDAQ: GOOG), together with Fidelity, owns a 10% stake in SpaceX, which does allow you to gain some indirect exposure, but that’s far from ideal.
The truth is there’s no effective way for anyone who isn’t accredited or well connected to take an early stake in SpaceX. It’s a case of tough luck, but that doesn’t mean you can’t find ways to profit from the company’s success at all.
As mentioned above, SpaceX is drastically cutting the cost of sending cargo to space, which means huge expenditure reductions for its customers. This includes communications companies like Iridium (NASDAQ: IRDM), Eutelsat (OTC: ETCMY), and Inmarsat (OTC: IMASY) that are planning to send satellite companies into space through the private space transportation firm.
At the same time, continuous reductions in launch costs will make these kinds of companies more vulnerable by reducing the barrier of entry. So in that respect, you could be looking at a double-edged sword.
There are also many equipment and service suppliers SpaceX relies on for its rockets to work, some of which are publicly traded. Finding hard connections can be difficult because this information is generally not shared with the public, but there are some strong indications that at least one public firm earns revenue for every Falcon 9 launch.
We’ll have more information for you regarding that firm soon, but that will have to wait until another day.
Until next time,
Jason Stutman is Wealth Daily's senior technology analyst and editor of investment advisory newsletters Technology and Opportunity and The Cutting Edge. His strategy for building winning portfolios is simple: Buy the disruptor, sell the disrupted.
Covering the broad sector of technology and occasionally dabbling in the political sphere, Jason has written hundreds of articles spanning topics from consumer electronics and development stage biotechnology to political forecasting and social commentary.
Outside the office Jason is a lover of science fiction and the outdoors, and an amateur squash player at best. He writes through the lens of a futurist, free market advocate, and fiscal conservative. Jason currently hails from Baltimore, Maryland, with roots in the great state of New York.