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  • Jamie Adams

Musk, Branson, and The 2 Companies Leading The New Space Race

Updated: Oct 7, 2019

Elon Musk’s SpaceX could become one of the most valuable companies on the planet and it hasn’t even gotten off the ground yet.


1. SpaceX

Elon Musk, CEO of SpaceX, wants to make the colonization of Mars (yes, the planet) a reality, and he might just be able to do it. 


Founded in 2002 as the Space Exploration Technologies Corp., SpaceX’s main goal is to create an affordable market for space transportation that will eventually allow the colonization of other planets through a series of space vehicles, including the Falcon launch vehicles and Dragon spacecraft family. 


In 2017, Musk unveiled an updated configuration of the system, now named Starship and Super Heavy, which is planned to be fully reusable and will be the largest rocket ever on its debut, currently scheduled for the early 2020s.


In September 2019, through a series of tweets followed by an official announcement, Musk unveiled a new Mars rocket prototype, named ‘Starship’, which was expected to embark on Mars missions ‘within months’ under the codename ‘Starlink’.  


So what does this mean for the company’s profits? A recent Morgan Stanley study showed that the privately-held company could reach a value of up to $120 billion, or triple the value of Musk’s flagship electric vehicle company, Tesla Inc (NASDAQ: TSLA), and larger than competing companies such as Northrop Grumman Corp. (NYSE: NOC) and Lockheed Martin Corp. (NYSE: LMT), whose current valuations stand at $64 billion and $112 billion respectively.


Morgan Stanley’s report outlined how the company will become this valuable, as it has the ability to disrupt the internet industry through SpaceX's planned constellation of nearly 12,000 satellites, called Starlink. The purpose of Starlink is to surround the Earth with high-speed, low-latency and affordable internet access through Musk’s own fleet of satellites, whose deployment would give SpaceX six times the number of all operational spacecraft in orbit. It is almost impossible to put a price-tag on the value of the internet industry, but some experts estimate that it could be worth up to $6.5 trillion by 2024. Even controlling a fraction of this market share would make SpaceX extremely profitable. Back in May, Musk was positive that Starlink could net $30 billion to $50 billion in annual revenue once it became fully operation, provided it could, in fact, capture a portion of the global telecommunications industry.


There is, of course, a wide margin of error if things go wrong for SpaceX. If the company completely fails in its Starlink initiative and remains exclusively a satellite launch business, it could be worth just $5 billion.


2. Virgin Galactic

Elon Musk has said that SpaceX, now held by a group of private investors, will ultimately go public, perhaps sooner than most investors think. Given its surging valuation, SpaceX could be the largest unicorn to ever hit the public market. 


We have mentioned a number of competitors above, but another company that has spent the best part of 2 decades trying to make space travel a reality is Virgin Galactic. As part of the Virgin Group, the company is privately held but plans on becoming the first publicly traded space flight company through a merger with publicly held Social Capital Hedosophia (NYSE: IPOA). 


If Richard Branson’s space tourism venture were to go public before SpaceX, it would not be a disaster for SpaceX as the two companies appear to have very different goals. While Musk intends SpaceX to become a means of connecting the planet, while colonizing others, Branson’s venture with Virgin Galactic is more focused on space tourism, manufacturing, and mining. 


Additionally, Virgin Galactic has built a unique, pre-commercial service order book of around 600 space tourism customers from 60 countries backed by a total of approximately $80 million in deposits.


The Skies No Longer The Limit

It seems that the sky certainly is no longer the limit as we talk about companies competing with each other to be the first companies in space. Back in the 1950’s, nations competed with one another to win the epic Space Race, but now it seems that Space Race II will take place between corporations. 


The real fun will be when the many different private space programs begin to go public. Space hotels, theme park rides and flying wealthy long-haul passengers into orbit are among the opportunities to tap once the space industry gets off the ground, which some estimates put at being worth a potential $805 billion once established. We may just be witnessing the rise of a new market that could dwarf the birth of the motor or aviation industries.


MyWallSt operates a full disclosure policy. MyWallSt staff currently hold long positions in Social Capital Hedosophia and Tesla. Read our full disclosure policy here.

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