SpaceX's Reusable Rockets Changed the Space Industry. Now Its IPO Could Change the Stock Market.

In October 2024, SpaceX achieved something incredible when it landed a rocket it had previously launched into space. It was the first time something like that had been done.

And now, with the company's initial public offering (IPO) on the horizon, it stands to change the space investment equation as well. Here's what I mean.

Somewhere, beyond the stars

Last week, news dropped that SpaceX might file for an IPO in the near future, and space-related stocks rallied as a result.

The company could be valued at $1.75 trillion, which would make its IPO the single largest in market history. And I foresee it having the same effect on space stocks as one of Elon Musk's other companies, Tesla, had on electric cars.

Before Musk took over at Tesla and started making attractive, practical electric vehicles (EVs), they were a bad joke in the auto industry.

Now, almost every legacy automaker has one or more EVs in its lineup. Musk managed to make them be taken seriously and lent legitimacy to EVs as an idea. Based on the stocks that have continued to rally after the news that SpaceX's IPO was much closer to reality, I think the offering will do the same thing for space companies.

Today there are plenty of other EV manufacturers aiming to replicate Tesla's success, like Rivian or Lucid.

The key difference is that there were already space companies on the market well before the IPO was in sight. Shares of AST SpaceMobile, which specializes in space-based cell networks, shot up 12% in the last week alone on the news from SpaceX.

Rocket Lab, a rocket designer, is up 11.78% over the same time frame. Firefly Aerospace is up almost 20%, and York Space Systems is up just over 6%.

I anticipate that shares of these smaller companies will move in the same direction as SpaceX following its IPO as Musk's company grants legitimacy to investing in the space economy.

The eagle is coming in for landing

SpaceX's technology itself is likely to change things for those smaller space companies as well. Particularly the ones involved in launching satellites into orbit or probes to the moon and even beyond.

Previously, the closest thing we had to a reusable spacecraft was the Space Shuttle. But the rockets that propelled it into space were not reusable, and that made launching it expensive.

Each launch of the Shuttle could run as much as $1.5 billion before it was retired in 2011; that's roughly $2.1 billion in today's money (working from 2011 levels).

For comparison, even before SpaceX caught its Falcon 9 rocket, a launch cost $62 million on average and was increased to $67 million in 2022. Even after the price increase, a Space Shuttle launch was still 31 times more expensive.

And now that SpaceX can reuse rockets, I expect it to get even cheaper.

The company had already changed the game for space travel by making it much cheaper before its iconic rocket catch. But in 2024, it proved that costs could go even lower, and space travel could become even more cost effective.

And whether you plan on picking up shares of SpaceX or not, many of the smaller space companies are worth investing in and might be worth buying before more news of the IPO drops.

James Hires has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends AST SpaceMobile, Rocket Lab, and Tesla. The Motley Fool has a disclosure policy.