SpaceX IPO: It Won’t Happen and Here’s Why

A SpaceX Corporation IPO Had Few Chances Before;Now Its EvenA SpaceX Corporation IPO Had Few Chances Before; Now It’s Even More Elusive

SpaceX Corporation seemed to have found a sweet spot in 2016. It scored many successes in recent months. But, on September 1, its “Falcon 9” launch vehicle exploded on the launchpad in Florida. This comes 15 months after the related rocket suffered a similar fate. There can be no doubt that the incident marks a serious setback for the California-based company. Not only does it send the company back to the proverbial drawing board, it compromises any plans for a SpaceX initial public offering (IPO).

Elon Musk, founder and all-around SpaceX boss tweeted that the explosion originated in the upper part of the oxygen tank. But, at that time, he could not pinpoint a cause yet. The SpaceX rocket exploded in the preparation phase to launch a satellite. Nobody suffered any injuries, but Falcon 9 was supposed to deliver the Israeli “Amos-6” communication satellite in orbit.

Its success would have rewarded SpaceX with significant bragging rights as well as revenue. The mission involved, at 5.5 tons, the heaviest payload that SpaceX has ever attempted to launch into orbit. Moreover, Facebook Inc (NASDAQ:FB) was going to use this satellite to expand Internet access in Africa. A success would have enhanced the image of SpaceX and Facebook. Of course, the explosion has not marked the end of the launch program, but it does mark a delay.

SpaceX Has Had 18 Successful Flights

Elon Musk established SpaceX in 2002. The Falcon 9 rocket failed for the first time on June 28, 2015. It exploded shortly after takeoff from Florida as it attempted to deploy its “Dragon” capsule to the International Space Station (ISS) on a resupply mission. SpaceX has signed a $1.6 billion deal to provide 12 such missions for the ISS missions. It has successfully concluded six of them.

This setback, even amid the success, will doubtlessly force SpaceX to delay its programs. This is essential because the company must determine the cause and an appropriate remedy. It wants to send actual human astronauts within the next two years. Indeed, Americans have not sent astronauts to space from U.S. soil since the last space shuttle took off five years ago. SpaceX is competing with Boeing Co (NYSE:BA) for NASA’s attention. Until now, anyone wanting to visit space or go to the ISS must do it using the Russians’ space taxi service.

NASA, especially given the ever-worsening state of Russo-American relations, understandably wants a viable American alternative to the Russians as soon as possible. As it stands, the Russians have the power to deny U.S. astronauts from going to the ISS. SpaceX and Boeing had expected to resume human launches from Cape Canaveral in another year or two, meaning 2018 at the latest. That will likely change to 2019 for SpaceX.

Moreover, before the explosion, SpaceX planned six launches by January, including one to the ISS using its Dragon supply capsule. Since it resumed flight missions after the June 2015 incident, SpaceX had eight launches, managing to recover the first stage of Falcon 9, returning it Earth smoothly for reuse on six occasions. But there’s another problem that the latest explosion has created.

A Setback To the SpaceX Mars Mission?

SpaceX needs to resolve the explosion problems as soon as possible. It must establish a reliable launch mechanism in order to cut costs while attracting revenue. Currently, the commercial satellite sector is dominated by Europe’s Arianespace, which deploys some 50% of all satellites. SpaceX’s American competitor, United Launch Alliance (ULA), a privately held consortium between Lockheed Martin Corporation (NYSE:LMT) and Boeing Co., has enjoyed a virtual monopoly on launching satellites for the U.S. military. Last April, SpaceX won a major military contract as well, which propelled the company deep in ULA territory.

But that’s not all, Elon Musk’s main goal for SpaceX is to generate sufficient revenue to allow the company to finance a mission to Mars. He plans to send its first unmanned spacecraft to orbit Mars in 2018, followed with a 2024 flight with astronauts onboard. But it seems that SpaceX will spend the remainder of this year trying to understand what went wrong, delaying all the other big plans.

It’s a good thing that SpaceX does not trade publicly. There won’t be a SpaceX IPO any time soon. But there are many ways to profit from the aerospace sector, including companies directly involved in space exploration. Check HERE for a report that will show you how.