The Time Is Right: SpaceX Should Go Public

As investors in public equities, we're sometimes deprived of access to some of the best businesses on the planet. I'd love to own shares in In-N-Out Burger, for example. Others clamor for access to Twitter and Pinterest.

Of them all, I'm most interested in SpaceX. Founded in 2002 by Elon Musk, a year before he helped birth Tesla Motors (NASDAQ: TSLA  ) , SpaceX is a moniker, short for Space Exploration Technologies.

Like Tesla, SpaceX is a vertically integrated company that handles design and production in-house. And with good results: the company's Dragon unmanned vehicle docked with the International Space Station during a historic resupply mission in October. A second mission lifts off Friday.

All told, SpaceX is signed on for 12 resupply missions to the ISS. More than 40 missions are on the books between now and 2017, according to the company's launch manifest. That's a huge backlog and likely to be troubling for the United Launch Alliance of Boeing (NYSE: BA  ) and Lockheed Martin (NYSE: LMT  ) , both of which have had a tougher time generating revenue from space missions in recent years.

Lockheed's Space Systems revenue improved 1.2% last year but remains down from 2010 levels. Boeing has suffered five straight years of declining revenue from space and defense contracts. SpaceX, the disruptor, has to be at least partially responsible for the decline.

At the very least, I find it telling that millionaire Dennis Tito, the first space tourist in American history, has outlined plans for a 501-day privately funded mission to Mars using SpaceX's Falcon Heavy launch rocket combined with a Dragon spacecraft.

So why not go public? To be sure, Musk has his hands full with Tesla and ramping production for the Model S sedan while battling The New York Times. Taking SpaceX public now would create added pressure at an inopportune time.

So be it. The competitive dynamics favor SpaceX about as much as they ever have, which improves the odds of a successful IPO. I'd love to see it, but you may have a different view. Please weigh in using the comments box below.

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Read/Post Comments (8) | Recommend This Article (5)

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  • Report this Comment On February 24, 2013, at 8:20 PM, TMFBlacknGold wrote:

    Right on Tim. I'd love to own SpaceX, although I bet the IPO price would be crazy high. I wrote about this last year for the blogging network around the time SpaceX hooked up with the ISS. I included some other privately-held space companies too:

    http://beta.fool.com/blackngold/2012/05/30/economics-space/5...

    --Maxxwell

  • Report this Comment On February 25, 2013, at 12:46 AM, peeple wrote:

    Why? SpaceX has tons of contracts flowing in, it has no need of public money. And Tesla is being crucified in the stock market.

  • Report this Comment On February 25, 2013, at 11:24 AM, TMFCrocoStimpy wrote:

    @Maxwell

    >>I'd love to own SpaceX, although I bet the IPO price would be crazy high.

    Dare I say "sky high"?

    :)

    -Xander

  • Report this Comment On February 25, 2013, at 12:08 PM, steven107 wrote:

    There were some interviews/articles suggesting that after tesla and solar city ipos were out of the way that space x would follow. But in a youtube interview in january/22/2013 computer history museum, 'An Evening with Elon Musk and Alison van Diggelen', he walks that idea back and says that going public would cause the company to focus mainly on short term goals and ignore long term goals such as trip to mars. Says he intends to keep it private for now for that reason.

  • Report this Comment On February 25, 2013, at 12:40 PM, Fool wrote:

    Great article Tim. I too have had SpaceX on my watchlist for awhile now.

    @ steven - I might be going out on a limb here, but I expect that a trip to Mars will be a huge financial commitment. No doubt that Musk will go as far as he can with private funding and internal cash flow from the contracts that he has in place. But if something like that really is on the horizon (pun intended), they are certainly going to need to tap into the public markets sooner or later.

  • Report this Comment On February 25, 2013, at 3:24 PM, jdorsey41 wrote:

    While I would love to own stock in SpaceX, I don't see it in their best interest to go public. As Elon and others have mentioned, operating a public company can be a huge distraction from long term goals. Especially long term goals that will cost huge sums of money with no short term return on investment.

    Based on their satellite and (eventually crewed) launch business they will have a great earnings ramp. But, I expect that Elon will be churning as much of that extra revenue as possible into his long term vision of Mars colonization.

    I see Mars colonization as a very tough sell to public investors. I would love to own SpaceX, but I want the Mars objectives to be reached more. It seems that Elon is leaning toward keeping it private for this reason lately (he used to talk about taking it public in the past, but now seems to favor keeping it private).

  • Report this Comment On February 26, 2013, at 12:45 AM, SuntanIronMan wrote:

    It would be (potentially) be good for -us- investors if they want public. I'd like to own a piece of SpaceX (at the right price, of course, and assuming the financials are in order). But unless the company needs the cash to fund some huge expansion, I don't see why -the company- would need or want to go public.

  • Report this Comment On April 01, 2013, at 10:36 AM, BigDogkh52 wrote:

    As an owner of over 30,000

    shares of SpaceX stock, paper only at this

    point, I would like to see them go public.

    The company has done a couple of buy

    backs and a former employee offered $25 a

    share. Last time I heard the stock has a

    valuation of $18 so that should tell you

    something. I hope they go public soon but understand why Elon is holding off. He

    would loose control and probably his

    vision for the future of SpaceX.

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