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SpaceX (NASDAQ:SPCX) wants to get its whole rocket home. On Starship's 15th test flight, set for as early as Friday, Nov. 13, the company plans to catch both halves of the rocket using its launch tower. If both catches work, SpaceX says it'd be the first full recovery of an orbital launch system.
The bottom half, the Super Heavy booster, has been caught on three past test flights. The top half hasn't. That part's the upper stage (the section that takes satellites the rest of the way to orbit, which SpaceX simply calls the ship).
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Since its IPO, SpaceX's stock has traded as high as $225.64. Shares trade around $143 as I write, about 37% under that high. With a potentially historic flight a day away, is the stock a buy?
I think a successful catch would be a big milestone for Starship. But I doubt it would change much about what investors are paying for now.
SpaceX's mission page shows a 75-minute launch window starting at 4:45 p.m. Central time on Friday, pending regulatory approval as I write. The booster is due to be caught around six and a half minutes after liftoff. The ship, meanwhile, is meant to deploy 26 of Starlink's bigger V3 satellites and spend over 22 hours in orbit before trying to land at the tower in Texas. If Starship takes off on Friday, that would put the ship's catch on Saturday afternoon.
Even that final step isn't a given. SpaceX said the ship will only come back to the launch site if its flight control team confirms that the systems it needs for reentry and landing are healthy. Otherwise, it can be brought down over the ocean instead.
"Success is not guaranteed on these first flights, but I'd say it's more likely than not that this succeeds next flight," CEO Elon Musk said on the Oct. 20 earnings call.
A rocket that returns can fly again. On the same call, President Gwynne Shotwell said SpaceX's aim is to "refly the second stage by early next year." Reusing the ship is what's meant to change Starship from an expensive test program into a far cheaper way to reach orbit.
For now, the program is still getting more expensive. Showing how hard SpaceX is pushing, the space segment's research and development spending grew 44% year over year to $1.2 billion in the third quarter. According to SpaceX's quarterly filing, that spending mostly goes to developing, building, and testing Starship. And it's risen every quarter this year, from $930 million in the year's first quarter to around $1.1 billion in the June quarter.
Still, the segment nearly broke even. More customer launches helped drive space revenue up 84% sequentially to $1.8 billion, and the segment's operating loss shrank to $7 million from $542 million in the second quarter.
But a year before the same segment turned a $259 million operating profit.
The bigger payoff from a reusable ship could arguably show up in Starlink. SpaceX's own payloads made up 358 of the 476 metric tons it sent to orbit in the third quarter. Plus, SpaceX says the 26 V3 satellites on Starship's first orbital flight added around 10 times the downlink capacity of a Falcon 9 Starlink launch.
SpaceX's valuation is around $1.9 trillion at the current price. Even annualizing its third-quarter revenue of $14.6 billion, the shares trade at around 33 times sales.
And most of that revenue has little to do with Starship now. The super intelligence segment, SpaceX's artificial intelligence (AI) business, pulled in $7.6 billion last quarter, around half the total. Connectivity, home to Starlink, added $5.2 billion. The space segment's $1.8 billion was around 12%.
So, a catch would likely help the long-term case more than the next few quarters. Starship still needs to fly again, fly often (Musk said on the call he expects weekly flights sometime in the first half of next year), and show lower costs in the numbers.
Sure, a miss or a delay probably wouldn't hurt today's business much. After all, Falcon 9 already launches Starlink satellites. A setback could mainly cost time and more quarters of growing Starship spending.
Is SpaceX stock a buy ahead of Friday's launch? Not for a tower landing alone, in my view. At around 33 times sales, the growth stock's price depends mainly on AI computing and Starlink, and the Starship tab is still rising.
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Daniel Sparks and his clients do not have positions in any of the stocks mentioned. The Motley Fool has positions in and recommends Space Exploration Technologies. The Motley Fool has a disclosure policy.
Is SpaceX Stock a Buy Before Its First Try at Catching a Starship Upper Stage? was originally published by The Motley Fool
