Morgan Stanley Values SpaceX: Huge Potential In Space Companies

Morgan Stanley have recently said that they see SpaceX as a company that could be soon in the $50 billion plus range in terms of value, although they know that Elon Musk isn’t willing to let the company go public just yet.

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The crowning success of Elon Musk has been to show the world that electric cars are actually really good. Not only are they clean and quiet, but they can genuinely be really decent performers against their petrol powered peers.  I’ve seen a tenfold increase in the number of electric cars on the roads in my hometown and with governments planning to ban cars powered by combustion engines within the next few decades, it looks likely that it will rapidly increase. Electric cars may well have taken off without Tesla, but it certainly acted as a catalyst and brought the industry forward.

Some have said that with the Tesla is the Apple of the electric car world; everybody wants one. All models of Tesla on sale are in high demand and their biggest issue is getting the product off the conveyer belt in time; not a bad situation to be in as a company. Despite some traders endlessly shorting Tesla shares in the hope that they fail, Elon keeps persuading investors that Tesla could be the first trillion dollar company and I wouldn’t bet against that.

But what of Elon Musk’s other venture? His private spaceflight company, SpaceX, which grabs all the headlines for its spectacular vertical rocket landings, and in the past, its spectacular explosions. The long-term goal of SpaceX, as Elon Musk has often celebrated, is to take humanity to Mars and to make us a multi-planetary species. This year alone, SpaceX have successfully completed 15 launches and have a perfect record, something that has been lacking in the past. Back when SpaceX first started launching rockets, and attempting to land them on imaginatively named barges, millions would tune in as the company live-streamed the event and newspapers would have the success or failure of the launch on their front pages. Nowadays, successful launches are beginning to get a bit routine and you rarely see the results unless you search for them.

What is SpaceX worth as a company?

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Global investment bank, Morgan Stanley, have recently said that they see SpaceX as a company that could be well in the $50 billion plus range in the near future, although they understand that Elon Musk isn’t willing to let the company go public just yet.

That money comes from the fact that Elon charges a lot less for his launches of satellites into low Earth orbit than other companies. Musk found that sending anything into space is really expensive, particularly because only a few companies held a monopoly over the industry and they happened to be very expensive, bad for the environment and particularly wasteful in terms of resources. Musk changed the industry when he started launching rockets and returning the first stage booster to an upright landing pad, ready to be refurbished and reused. This year alone, Musk has reused 3 first stage boosters, as other companies let them burn up in the atmosphere.

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Elon Musk is making rocket launches mundane and that could be worth tens of billions of dollars. Morgan Stanley says SpaceX developing reusable rockets is “an elevator to low Earth orbit.”

“When Elisha Otis demonstrated the safety elevator in 1854, the public may have struggled to comprehend the impact on architecture and city design. Roughly 20 years later, every multistory building in New York, Boston, and Chicago was constructed around a central elevator shaft,” Morgan Stanley said. “It all comes down to SpaceX.”

Musk has said himself that launching rockets is a risky business and one mistake or incident can push the companies launch schedule back months. One of his reasons for not looking for an IPO, aside from the fact that he has billions to invest himself, is that one small incident could spook investors and ruin the company. But given the current successful string of launches, supplier mistakes and manufacturing malfunctions look to be a thing of the past. SpaceX will continue to launch satellites, building on a stable platform before testing manned launches. The company aims to generate enough cash to be able to fund its Mars missions in the next few decades, and if Elon’s bravado is to be believed, this is definitely the plan.

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“The goal of the satellite internet business is to generate enough cash to be able to go to Mars” the research firm said, adding that it believes Musk is serious about his goal of planetary expansion.

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From the beginning, SpaceX had a goal of reducing launch costs to $60 million, from the $200 million that ULA were charging when they had the monopoly. The aim is to further reduce that to $5 million per launch. The real game changer for SpaceX is if they can successfully launch a satellite broadband network which will bring in billions in revenue.

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Elon Musk and SpaceX have continually denied preparing an IPO, but Morgan Stanley say it should not be ruled out:

“It seems reasonable to us to consider whether the company could look to access capital in the public markets as there is substantial room to increase the investment in space. Public investors will start to pay more attention to space when or if SpaceX decides to IPO.”

Cover photo is concept art from Encho Enchev

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