There are many fascinating start-ups as well as more established private businesses that would make for potentially great investments if and when they go public. However, these two top my list of companies that I want to IPO in 2016 -- or at least relatively soon.
SpaceX is a spacecraft maker and NASA contractor that CEO Elon Musk founded in 2002. It's been in business longer than electric-vehicle maker Tesla Motors (NASDAQ:TSLA), which the serial entrepreneur founded in 2003, and solar-panel maker and installer SolarCity (NASDAQ:SCTY.DL), which he helped his two cousins start in 2006. Yet SpaceX is the only one of Musk's current three companies that remains private.
Unfortunately for us small investors, however, a SpaceX IPO in the near future is highly unlikely. Musk has said several times that he doesn't want to take SpaceX public until the company's Mars Colonial Transporter is shuttling humans between Earth and the Red Planet -- which he expects to be in the mid-2020s. He's concerned that SpaceX being a public company could potentially lessen the likelihood of it achieving its fundamental goal of creating the technology needed for establishing human life on Mars. This is because stock prices of public companies are subject to the whims of a very short-term-focused Wall Street, which isn't a great fit for a long-term-focused company whose quarterly revenue is surely hugely "lumpy."
SpaceX's financials allow Musk to take this stance. He's said that Tesla and SolarCity went public only because they needed the money. SpaceX, however, not only has private investors, but also has a $1.6 billion contract with NASA to resupply the International Space Station, which makes for a solid core revenue source. The company is also reportedly profitable, making it unique among Musk's three companies.
Musk, however, has said that he's open to changing his mind. So, there's a possibility we could see a SpaceX IPO before the Mars Colonial Transporter is up and running.
Investors can expect a humongous valuation when SpaceX goes public, particularly if it's after the company is transporting people to and from Mars. The most current solid valuation for the company is just over $10 billion-$12 billion in January 2015, based on the $1 billion raised from new investors Google and Fidelity. Certainly, this number has risen because of SpaceX's accomplishments in 2015. Notably, its Orbcomm-2 mission in December made history when, 10 minutes after blasting off into space, the first stage of the Falcon 9 rocket returned to successfully land vertically back on Earth. Neither of fellow NASA launch contractors Boeing and Lockheed Martin has accomplished such a feat, nor has NASA itself or the space program of any other country. (Amazon.com CEO Jeff Bezos' Blue Origin accomplished a similar feat with its New Shepard spacecraft a month before SpaceX, but Musk and others claim it wasn't comparable for several reasons.)
The potential economic consequences of this first-ever achievement are mind-boggling. If SpaceX can consistently land its rockets successfully back on Earth, it can reuse them. This scenario would allow it to conduct space explorations and missions for NASA and others at costs considerably lower than its competitors', while also making more profit. It also brings Musk's goal of colonizing Mars one giant step closer, as reusable rockets and passenger capsules are critical to achieving this goal.
Given the massive barriers to entry in the space industry, a SpaceX IPO should be even more successful than the phenomenally winning Tesla IPO and the quite successful SolarCity IPO. Through Jan. 15, Tesla's stock has raced to a 758% gain since its entry into the public markets in June 2010, while SolarCity's stock has risen 199% since its December 2012 IPO.
A Carbon3D IPO is likely on the nearer-term horizon, in my opinion, though 2016 is probably an ultra-long shot. The current market for a 3D printing IPO would almost surely be depressed because of the sorry state of industry leaders 3D Systems (NYSE:DDD) and Stratasys (NASDAQ:SSYS) as well as most of the smaller players. Even if this weren't the case, in my opinion, Carbon3D would likely wait until after the release of its first product -- slated for this year -- to go public.
The 3D printer for the enterprise market that Carbon3D plans to launch in 2016 is powered by its potentially game-changing Continuous Liquid Interface Production technology. CLIP harnesses UV light and oxygen to "grow" polymer parts continuously. It's reportedly 25 to 100 times faster than the leading 3D printing technologies, and its materials possibilities are supposedly immense. These compelling features, along with others, give CLIP the potential to disrupt the manufacturing sector. Speed and materials capabilities are among the top hurdles holding back 3D printing from making increased inroads into manufacturing applications. CLIP also has the potential to snatch business away from 3D Systems, which is primarily involved in the polymers 3D printing space, and Stratasys, which solely makes polymer 3D printers, though it does provide metal 3D printing in its services operation.
Carbon3D's co-founder and CEO Joseph DeSimone wowed the tech world when he demonstrated CLIP at the TED 2015 conference last March. Carbon3D has also won over some impressive names: After being initially backed by Autodesk, it scored a $100 million funding round led by Google Ventures, Alphabet's venture capital arm, and attracted revered former Ford CEO Alan Mulally to its board of directors last May.
There you have it: my dynamic duo of future IPOs, SpaceX and Carbon3D. Both companies have the potential to make fantastic investments.