Can't Buy Into SpaceX? Here's How to Get A Piece Of The Rocket Launch Action

Author: Neil Dennis | December 28, 2023 12:37pm

One of the hottest investment topics of 2024 is likely to be whether Elon Musk‘s SpaceX will spin off its Starlink satellite launch services business — an initial public offering (IPO) that would likely garner massive support.

So far, Musk has kept SpaceX and its subsidiary in private hands, saying the company must meet certain financial targets before he’ll consider taking it public. However, many analysts believe such sales and profitability conditions have already been met.

Reports last month that a Starlink spin-off was already under discussion caused a stir, but Musk simply responded on X with a post saying these rumors were “false.”

Existing Listed Stocks Offer Market Exposure

But investors don’t have to wait for a Starlink IPO to gain exposure to this lucrative market. Stocks and exchange traded funds already exist that are competing with Musk’s company in the launch services sector.

Shares in aerospace group Boeing (NYSE:BA) are up 38% this year, while rival Lockheed Martin (NYSE:LMT), although down on the year, is up 12% since the end of October.

Also Read: Elon Musk Says Starlink IPO Discussions ‘False’ Following Report Of Spin Off

These two companies jointly own United Launch Alliance (ULA), which is thought to be the target of a takeover from Blue Origin, an aerospace company owned by Amazon founder Jeff Bezos.

While this takeover rumor piqued the interest of those who would love to see the already well-documented Musk-Bezos rivalry take off into space, investors were more interested in the possibility of two extra-terrestrial IPOs in the future — should a merger with ULA push Blue Origin into profitability.

Takeover and spin-off rumors aside, the increased activity in the sector has captured investor imagination. So how can investors get a slice of the action, in the absence of any upcoming IPOs?

For a start, there’s the above-mentioned Boeing and Lockheed Martin stocks, which could get a boost in the coming weeks if a firm offer is made for ULA.

Other potential bidders have been rumored — these include private equity firm Cerberus Capital Management and Textron (NYSE:TXT), the maker of Bell helicopters and Cessna planes, whose shares are up 14% this year. A bidding war would likely push the purchase price higher.

Exchange Traded Funds As A Guide

Alternatively, there are several exchange traded funds that offer exposure to the aerospace sector. The largest of these is the iShares U.S. Aerospace And Defense ETF (NYSE:ITA) and is up around 14% this year. The best performing is the ARK Space Exploration And Innovation ETF (NYSE:ARKX) with an annual gain of 26%.

Also, these ETFs can give investors a guide to individual stocks. RTX Corporation (NYSE:RTX), which makes missiles, guidance systems and satellites, is a popular component of these ETFs, and its shares have bounced 20% in the past three months.

TransDigm (NYSE:TDG) represents the more military side to aerospace and defense investing, but its shares are up 59% this year.

Now Read: Musk Vs. Bezos In Billionaire Space Race As Blue Origin Bids For United Launch Alliance

Photo: Shutterstock

Posted In: ARKX BA ITA LMT RTX TDG TXT