SpaceX Plans Starship Launch For Tomorrow. Here's What Investors Need To Know

SpaceX (NASDAQ:SPCX) is once again looking to launch a test flight of its Starship megarocket. Investors should be paying very close attention, as the impact on SpaceX’s stock price should be meaningful.

After several aborted attempts, the company is looking to complete the rocket’s thirteenth test flight on July 23. As with most SpaceX launches, the attempt will be livestreamed via the company’s website.

“The booster’s primary test objective will be executing a successful launch, ascent, stage separation, boostback burn, and landing burn at an offshore landing point in the Gulf of America,” SpaceX explains. “There have been several modifications to hardware and software to address issues seen on the previous flight.”

The impact of this test flight for SpaceX cannot be overstated. In many ways, SpaceX’s long-term growth plans hinge on the company’s ability to successfully commercialize its Starship rocket.

If you’re a current or potential SpaceX investor, there are two things you need to know.

1. Starship is critical for SpaceX growth plans

In its IPO prospectus filed earlier this year, SpaceX was not shy about predicting its growth potential.

“We believe we have identified the largest actionable total addressable market in human history,” the company boasted. “We estimate that our quantifiable TAM is $28.5 trillion.”

Digging deeper, it may be surprising to learn that SpaceX attributes just $370 billion to what it calls “space-enabled solutions”. That bucket includes the total revenue potential of commercializing its Starship rockets.

With a market cap well above $2 trillion, successfully commercializing rockets may not seem critical to SpaceX’s long-term plan, given its relatively low growth potential. But investors must understand that the success of SpaceX’s Starship rocket will enable other growth opportunities that are much more lucrative long term. In other words, Starship’s value won’t be relegated to payload fees alone.

For example, SpaceX attributes $1.6 trillion of its total addressable market to its Starlink internet service. If successful, its Starship rocket would dramatically increase the number of satellites SpaceX can launch in any given year while also lowering the cost of getting them into space.

In other words, SpaceX’s Starship rocket will increase the odds that SpaceX will be able to realize as much of its claimed $1.6 trillion opportunity as possible.

Meanwhile, SpaceX attributes a massive $26.5 trillion of its total $28.5 trillion addressable market to a single opportunity: AI. While this bucket contains many smaller opportunities, one of SpaceX’s biggest growth catalysts should be the realization of orbital data centers.

Orbital data centers are exactly what they sound like: data centers that operate in space. In space, data centers can take better advantage of solar energy and low ambient temperatures, lowering ongoing operating costs.

There are many technical challenges to getting data centers to operate successfully in space. One of the biggest, however, is simply getting these systems into space economically. If successful, SpaceX’s Starship rocket would meaningfully improve the company’s chances of doing so.

2. Competition for Starship is heating up

SpaceX’s rocket program is arguably the most advanced rocket program on the planet. But there’s rising investment across the industry, which will create more competition for SpaceX over the coming months and years.

Government entities like China’s CNSA and India’s ISRO are pursuing their own rocket developments. Meanwhile, private companies, including Blue Origin, Rocket Lab (NASDAQ:RKLB), and Relativity Space are also aggressively pursuing the development of their own rocket systems.

SpaceX’s rocket program, however, is unique in terms of its vertical integration.

“SpaceX has also effectively achieved a high degree of vertical integration,” observes Government Technology, a public sector magazine. “It owns almost all parts of its supply chain, designing, building, and testing all its major hardware components in-house, with a minimal use of suppliers. That gives it not just control over its hardware but considerably lower costs, and the price tag is the top consideration for launch contracts.”

It’s hard to disagree about SpaceX’s success, both in terms of its launch achievements and its cost competitiveness. But it’s also clear that competition is heating up.

If SpaceX’s upcoming test flight is successful, that will help clear the path for the full commercialization of Starship. In this scenario, SpaceX will once again put itself ahead of the pack in terms of both technology and launch costs. Both of those factors will prove critical to the company’s ability to execute on its long-term growth potential.

SpaceX’s rocket program is arguably the most advanced rocket program on the planet. But there’s rising investment across the industry, a fact that will create more competition for SpaceX over the coming months and years.

Ryan Vanzo has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Rocket Lab. The Motley Fool has a disclosure policy.