There's no doubt that SpaceX shares will be expensive once SpaceX stock finally hits the market. Although CEO Elon Musk hasn't offered a timeline on an initial public offering (IPO), SpaceX's revolutionary spacecraft and $12 billion valuation ensure it'll be one of the largest IPOs of the decade.
You see, the company's goals expand beyond just launching rockets. One of Musk's most high-profile goals is to start sending people to live on Mars by 2022. That's the nature of SpaceX - it strives to achieve this goal mostly because it's considered impossible.
Those goals also ensure there will be huge interest in SpaceX shares when they debut on the market.
"We have goals that are absurdly ambitious by any reasonable standard, but we're going to make them happen," says Musk on the SpaceX website.
Plus, the firm just disclosed yet another insanely ambitious project that could dramatically boost the valuation of SpaceX ahead of an IPO.
This new project - combined with other historic projects, like becoming the first company to successfully launch and land a reusable rocket, ensures the firm will make an incredible splash when it hits the stock market.
Here's more on the new project that adds to SpaceX's portfolio of revolutionary ideas...
SpaceX's New Project Makes the Big Move into the Broadband Sector
On Wednesday, May 3, SpaceX Vice President Patricia Cooper outlined a plan before the U.S. Senate to launch a network of Internet broadband satellites that will orbit Earth. About 4,425 satellites could be launched in phases through 2024, with the first starting in 2019 and tests starting later this year.
The primary goal is to provide fast Internet access across the globe. Cooper also mentioned the project would relieve people of the hassle of physically installing Internet back on Earth.
"In other words, the common challenges associated with siting, digging trenches, laying fiber, and dealing with property rights are materially alleviated through a space-based broadband network," Cooper told the Senate committee.
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She said they would be launched via SpaceX's Falcon 9 rockets, which have been the firm's bread and butter in recent years. Most of SpaceX's revenue comes from massive contracts with agencies like NASA that use the Falcon 9 to send payloads of supplies. For instance, NASA and SpaceX inked a $2.6 billion deal in 2014 that obligated SpaceX to launch supplies to the International Space Station (ISS) via Falcon 9 rockets.
This more ambitious use of the Falcon 9 model will certainly attract more funding leading up to the SpaceX IPO. The company has already accrued $1.1 billion over seven funding rounds. Its stunning 3,233% growth from $30 million in Series D funding to $1 billion in Series E crushed the growth of higher-valued companies over the same rounds. Flipkart, for example, only saw funding increase by 140% from $150 million to $360 million over the same rounds.
As you can see, SpaceX ranks as the ninth highest-valued private company in the world...
The $12 billion SpaceX valuation - as well as the firm's impressive funding growth - ensure the SpaceX IPO will be a huge market event.
That leaves the most important question in the wake of the recent SpaceX news...
Could SpaceX Shares Hit the Market This Year?
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While investors like to speculate about whether or not the firm will go public in 2017, SpaceX still hasn't filed a Form S-1 with the SEC required to list on a stock exchange. Unfortunately, we probably won't see SpaceX submit that filing this year for two big reasons...
First and foremost, SpaceX's primary business is experimenting with rockets. This has obviously led to several launch failures, with the one in September 2016 being the fifth since 2006.
Because the company currently deals with this kind of trial and error, SpaceX stock wouldn't be the most welcome investment on Wall Street right now. Short-term incidents like these could scare investors into selling their SpaceX stock, which would harm the company's goals beyond rocket launches.
The second reason is that Elon Musk simply doesn't want to sell the company to shareholders right now. Musk is known for considering shareholders a low priority, especially in regard to his other company, Tesla Inc. (Nasdaq: TSLA).
In fact, Musk publicly said about Tesla in October 2013 that "the stock price that we have is more than we have any right to deserve." This shocked TSLA shareholders since it's typically bizarre for a CEO to undermine the value of his own company. However, Musk's statement showed his dedication to his entrepreneurial vision rather than to his shareholders looking for profits.
And he's made clear his similar dedication to SpaceX. At a Tesla annual shareholder meeting in June 2015, he said keeping SpaceX private is crucial to fulfilling the long-term goal of Mars colonization. When asked about the SpaceX IPO, he said it will happen "once flights to Mars begin."
The Bottom Line: Investors have been wanting to own SpaceX shares for years now. Despite the five launch failures over the last decade, SpaceX has still managed to stoke plenty of interest from people looking for an ambitious company with revolutionary goals. SpaceX's announcement this week that it will launch a network of satellites to provide global Internet access proves once again it will be a thrilling stock to buy. But don't plan on the SpaceX IPO happening in 2017. The experimental nature of its business and Musk's focus on the firm's goals ensure it will remain private for the foreseeable future.
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