You run SpaceX, which is the very first private company, non-nation, to be able to put something into orbit around this planet that we call Earth... Where do you find time for your secret identity as Batman?
-- Stephen Colbert, interviewing SpaceX CEO Elon Musk
Five years ago, that's how comedian Stephen Colbert introduced his viewers to Elon Musk, co-founder of SpaceX -- and as introductions go, it was a pretty good one. Historically, lots of companies -- Boeing, Lockheed, GenCorp -- have helped NASA's space program put objects into orbit. But only Elon Musk's SpaceX has put an object in orbit all on its own, and just for kicks.
Now, you might think this would give SpaceX an insurmountable lead in the movement toward commercialization of space. Instead, it turns out that "space" is starting to fill up with competitors. In fact, the line extends from here to the moon itself.
Introducing Moon Express
Just this past week, we learned that a little shop by the name of "Moon Express" has gotten the go-ahead from NASA to send a privately owned, privately financed robotic lander to the moon. Financed by billionaire investor and co-founder Naveen Jain, Moon Express aims to send its MX-1 lander to the moon sometime next year. If successful, this mission will pave the way for future missions to mine the moon for mineral riches -- including gold, cobalt, iron, palladium, platinum, and tungsten -- then return these minerals to Earth.
NASA is helping out by lending Moon Express the benefit of its expertise, and assistance from its engineers. But Moon Express is footing the bill for the mission, hoping to recoup its investment with profits from eventual sales of valuable moon-mined minerals. (The company also expects to defray some of its initial investment by winning the $30 million Google-sponsored "Lunar XPrize" for landing a spacecraft on the Moon, rolling around it a bit, and sending back hi-def video to prove its accomplishment. It's this prize that Moon Express aims to win with its 2016 mission.)
What it means for investors
Like SpaceX, Moon Express has not yet undergone an IPO. As such, you cannot invest in it. In fact, also like SpaceX, Moon Express is "backed by a billionaire," one who may not need to hold an IPO to raise cash to fund his company -- so you may not ever get a chance to invest in it.
But that doesn't mean space is an empty waste for investors.
To the contrary, in addition to Moon Express, NASA is currently offering assistance to at least two other companies interested in starting up moon-mining operations: privately held Astrobotic Technology and Masten Space Systems, both of which aim to develop commercial robotic spacecraft. Both are serious companies, in business continuously for eight and 11 years, respectively, according to S&P Capital IQ.
Space Adventures, also privately held, has been organizing (and selling) trips to the International Space Station since 2001. To date, it's already sent seven civilian "astronauts" into space at ticket prices of roughly $20 million a pop. The company recently broadened its product offerings by offering spacewalks outside of ISS for an additional $15 million -- and has also begun selling tickets for trips to orbit the moon for as much as $150 million a head.
And if that's too rich for your blood, no worries. Space Adventures is reportedly looking to compete with Virgin Galactic's planned suborbital Earth rocketship trips, offering tickets for as little as $102,000, versus Virgin Galactic's reported $200,000 price tag.
And of course, there's also Bigelow Aerospace, the company making "expandable" habitats for living in space... and on the moon. And Bigelow, too, is privately owned.
I'm still not seeing any publicly traded companies here...
Nor am I. But here's the thing investors need to keep in mind: With all of these private companies swarming into space, and now starting to undercut each other on price, the time must eventually come when one or more of them realizes that self-funding is no longer an option. They must raise substantial cash from the public in order to leap ahead of the competition -- or even remain solvent. And that means one or more IPOs are inevitable. Probably sooner than later.
That's when we as investors must turn cautious -- to tamp down our natural enthusiasm for whiz-bang technology, and our urge to get in on the ground floor on a chance to invest in an honest-to-goodness "space IPO." Because as a general rule, companies don't IPO because they want to make you rich. Companies IPO because they need your money.
The cold, hard truth is that not every space company that IPOs in the coming years will turn into "the next SpaceX." More likely, very few of them will. And SpaceX itself?
Here's a hint: Elon Musk owns three companies: Two are unprofitable and have IPOed; one is profitable, does not need to IPO, and has not.
Rich Smith does not own shares of, nor is he short, any company named above. You can find him on CAPS, publicly pontificating under the handle TMFDitty, where he's currently ranked No. 293 out of more than 75,000 rated members.
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