SpaceX IPO Deep Dive: The Hype, the Price, and the Opportunity

We value SpaceX at $63 per share, a 53% discount to the upcoming IPO’s offering price. Our valuation is based on mathematics rather than skepticism: given the wide range of possible outcomes for the company’s financial future, we created DCF-based forecasts and valuations for three scenarios and probability-weighted them.

Source: Company filings, Morningstar estimates. Data as of June 6, 2026.

We give SpaceX the benefit of the doubt in two of the three scenarios (MVP and Moonshot), in which we assume the company can achieve a rapidly reusable Starship rocket and successfully commercialize datacentres in space. Neither of these engineering problems has been solved, and we don’t expect they will be until at least 2028.

In our most optimistic Moonshot scenario, the company would be worth $1.97 trillion, or $154 per share. That’s 14% above the offering price and a level the shares might even reach in the short term after their public launch, given widespread investor enthusiasm for SpaceX, AI infrastructure, and the IPO. 

We assign this scenario, in which both Starship is reusable and scaled orbital datacentres are highly successful, a 7% chance of happening, which is one reason our final fair value estimate of $63 is much lower than $154.

Morningstar’s consistent and independent equity research methodology is designed to help long-term investors ascertain a stock’s intrinsic value and weigh it against the prevailing market price. Our analysis focuses on the business's intrinsic long-term value, based on fundamentals, especially the firm's future cash flows.

Source: Company filings, Morningstar estimates. Data as of June 6, 2026.

Furthermore, given SpaceX’s Very High Uncertainty Rating, we would consider the stock as offering a highly attractive risk-adjusted return—and therefore earn a 5-star Morningstar Rating for Stocks—only if it traded at more than a 50% discount to our Fair Value Estimate. Put differently, at SpaceX's IPO offering price of $135 per share, our Fair Value Estimate would need to be approximately $270 per share, all else equal, for the stock to qualify for a 5-star rating. Alternatively, SpaceX shares would have to trade below $50 for a 4-star rating and below $ 31.50 for a 5-star rating.

For more on what could justify SpaceX's $135 valuation, get the full PDF here: One Small Step for SpaceX, One Giant Leap of Faith for Investors

Successive rounds of private investment culminated in a $250 billion deal to acquire artificial intelligence lab xAI from its founder that pegged SpaceX’s private market valuation around $1.5 trillion. 

Market conditions are primed for the company’s owners to offer around 3% of the company’s shares to public investors.  

• We initiate coverage of SpaceX, assessing the fundamentals of its three main business lines and their potential value to an independent investor. 
• Amid unprecedented supply and potentially fervent demand for its shares, we spell out how we think the boost, separation, and Max Q phases of the company's public launch could unfold.

• With a small initial float boosted by almost every investment bank on the planet, buoyant investor appetite for AI infrastructure bids, and an unprecedented path to inclusion in the Nasdaq 100 Index just 15 trading days after the IPO, we expect SpaceX’s share price will likely survive separation and even ascent toward orbit, at least for a time. 
• Max Q, the moment of greatest atmospheric pressure on a launch vehicle, will come for SpaceX’s stock in the months following the IPO, when successive tranches of stock held by private investors and employees are slated to become available for sale into the public market. 
• We think long-term investors eager to participate in SpaceX’s future will have opportunities to do so with a greater margin of safety than the initial offering is likely to provide.

• Our discounted cash flow valuation of SpaceX is $780 billion, about 48% below its private market valuation, including a wide range of probability-weighted scenarios for the AI business. 
• Our Morningstar Economic Moat Rating is narrow: The firm’s core launch and satellite communications businesses drive its moat rating due to the prodigious cost advantages achieved through continued research and development and accelerated economies of scale. 
• We see a wide range of possibilities around the newly acquired AI business and find its economic moat indeterminate. It poses a material threat of value destruction to the company, which limits our overall economic moat rating to narrow.

Founded in 2002 and commonly known as SpaceX, the Space Exploration Technologies Corporation designs, manufactures, and operates a family of reusable rockets to launch various payloads into Earth orbit for government and commercial customers. 

Starting in 2019, the company began launching a constellation of its own communication satellites to provide mobile broadband and wireless services under the Starlink brand. In early 2026, the company acquired xAI from its founder Elon Musk, which operates a large language AI model named Grok, a gigawatt-scale data center called Colossus, and the social media network X.

SpaceX is a vertically integrated conglomerate built around its global dominance in space-centric infrastructure. The company’s core strength is its ability to deliver payloads to orbit at unmatched scale, frequency, reliability, and cost efficiency. 

Other major business lines of the company, from Starlink to future orbital infrastructure initiatives, are ultimately derived from and enabled by its leadership in low-cost space transportation. 

The company’s technological lead over its competitors is evident in its having more than 80% global share in mass delivered to orbit and in having reduced launch cost per kilogram by more than 95%.

SpaceX’s cost advantage is driven by its reusable launch architecture, particularly the ability to repeatedly reuse boosters, thereby significantly lowering per-launch costs and spreading fixed manufacturing costs across multiple missions. 

The Falcon 9 platform has been the workhorse for the firm, but its next-generation Starship rocket has the potential to further reduce launch costs, increase payload capacity, and expand the range of economically viable orbital applications. 

Successful scaling of Starship, which we expect could occur by 2029, would significantly widen the firm’s advantage over its competitors, improve Starlink’s economics, and unlock new business models across communications, logistics, and space infrastructure. 

The firm’s current market value is contingent upon paving the way for novel revenue streams, such as orbital computing, which we believe are possible given the firm’s unique advantages, but their viability, timelines, and financial outcomes remain highly uncertain.

Profit drivers for the space launch business are basically launch cadence times payloads minus the steadily decreasing average cost to launch before reinvestments in research and development. 

The unit invested over $3 billion in research and development in 2025, with a focus on its large next-generation rocket, the Starship, on which much of its future business rests. Its enormous lift capacity and potential for full reusability, if it proves out, will provide a meaningful further step change downward in SpaceX’s average cost to launch, especially per unit of payload mass.

It may happen behind schedule, but we assume that the engineering of the reusable upper stages of Starship will eventually pan out. 

The challenge is to develop heat-shield materials that can withstand 1,800 degrees Fahrenheit and the stresses of atmospheric reentry without requiring time-consuming or costly remanufacture before they can repeat the journey. 

We point to advanced materials science and manufacturing techniques that enable turbine jet engine components to withstand thousands of flight cycles at temperatures above 3,000 degrees. We don’t think the turbines’ technology is transferable; we only point out why we think a solution is within the realm of possibility.  

Once paying customers use Starship, the company’s research and development costs will diminish as a percentage of sales, and we expect the launch business’ margin profile to improve over time, reaching $18 billion in revenue at a 20% operating margin by 2035 in our base-case scenario, as provided by PitchBook.

We expect Starlink to continue as the primary cash generation engine and internal funding source for other ambitious projects the firm has underway in the medium term. 

Starlink benefits from the firm’s extensive launch cost advantage, and a majority of the company’s future launches will be allocated to scaling Starlink deployment by launching tens of thousands of communications satellites into low Earth orbit. We expect Starlink’s revenue and profits to compound at a high rate, supported by its unmatched ability to provide connectivity in remote areas worldwide.

SpaceX, Morningstar estimates, PitchBook, Anthropic, United Nations, DESA Population Division, World Urbanization Prospects 2025. Data as of Dec. 31, 2025.

Our thesis does not depend on the company achieving all or even most of its stated aims. 

In SpaceX’s registration statement, it identifies a combined $1.6 trillion total addressable market for its mobile and broadband services. The figures equal or exceed all current global spending on mobile and broadband services outside Russia and China. 

Our forecast does provide for aggressive growth and very high incremental margins for Starlink service, and based on Starlink’s 2025 reported 50% revenue growth to $11.3 billion and 58% (positive) operating income growth exceeding $4.4 billion or 39% margin, we see the business model validated. 

We can see a path to further tens, not necessarily hundreds, of billions of dollars in annual revenue growth in the coming decade, and operating margins potentially exceeding 75%, driven by the company’s leading operating cost advantage and the negligible incremental cost of adding users to existing network infrastructure. 

An important consideration is that the biggest structural difference between a scaled satellite network operator such as Starlink and traditional cable, fiber, or wireless operators is that an investment in SpaceX’s orbital telecom infrastructure increases its utility to all users globally, whereas investments by fixed-line and wireless operators apply locally.  

Limitations on the amount of data that can travel to and from orbit over the available radio spectrum mean that Starlink faces meaningful barriers to adoption in the densest population centers, as well as a disadvantage in the latency of the signals it can maintain, especially relative to cable and fiber transmission. 

However, we don’t think Starlink has to solve these limitations or necessarily face them to succeed. Nearly one-fifth of the Earth’s population resides in the least-densely populated areas, providing close to 2 billion potential customers. 

A growing array of services, such as powering onboard Wi-Fi for airlines, plays directly into Starlink’s capabilities that incumbents cannot match. We call these niche-plus growth opportunities, and they include jobs such as telemetry and fleet connectivity that tend to operate across wide swaths of terrain and may not require the lowest latency. 

Our base-case forecast entails $56 billion in revenue for Starlink in these niche and growth areas by 2035, representing about 45% of the identifiable market we’ve sized.  

Another area where Starlink has seen rapid adoption is offering direct-to-cellular service. We don’t think the company will necessarily take on incumbent wireless providers, nor do we think it would be likely to succeed in doing so. 

However, we think that a global market opportunity amounting to $67 billion by 2035 exists, largely for Starlink’s taking: striking deals with mobile providers across the globe to offer an add-on service that provides satellite-based wireless connectivity where cell tower coverage is insufficient or nonexistent.

We see this wireless “add-on” opportunity as requiring only a few dollars per user across many hundreds of millions of potential users, using existing providers’ radio spectrum. We estimate Starlink could generate $24 billion in such revenue by 2035, 36% of the market we identified. 

For more on the factors driving our initiation of SpaceX, download the full PDF here. When Unicorns Fly: SpaceX Prepares History's Largest IPO

Given the centrality of Starlink to SpaceX's financial prospects and its long-term ambitions, we focus on how big the Starlink market can potentially be. Starlink's technology is well suited for providing connectivity in low-density areas and we do not anticipate the service disrupting the core telecom market.  

Despite this, we think that there is a significant global market opportunity of around $129 billion as of 2025, predominantly complementary to existing connectivity providers. Our revenue projections for Starlink imply that the company will penetrate 45% of these niche market opportunities by 2035.   

Source: Morningstar estimates. Data as of May 31, 2026.

Starlink has accounted for most of SpaceX's growth and profitability in the past three years and will be the main driven for SpaceX in the medium term. In our opinion, the central question with Starlink's is about how big can the market be for this service.

Starlink has accounted for most of SpaceX's growth and profitability in the past three years. We expect most of the company's profits to come from the Starlink business in the foreseeable future. Starlink will essentially be the financial engine that will make other ambitions projects at SpaceX possible. 

We expect Starlink to generate substantial cash in the coming years, and that capital will be used for other priorities, such as Starship development and artificial intelligence infrastructure buildout. 

Given the importance of Starlink, SpaceX has prioritized the business in allocating its launches. Starlink satellites account for most of the mass SpaceX places into orbit each year, and the firm is steadily increasing its constellation, which now exceeds 10,000 satellites, according to the latest estimates.

Source: PitchBook, Morningstar, Company filings. Data as of Dec. 31, 2025.

Source: PitchBook, Morningstar, Company filings, Jonathan McDowell, planet4589.org, WSJ. Data as of Mar. 31, 2026.

SpaceX's $1.6 trillion TAM figure appears to aggregate the total connectivity market across most countries (excluding China and Russia) and all segments, including wireless, broadband, and enterprise. 

The firm's quoted figure implies that Starlink is a credible competitor to incumbent telecom providers across all geographies and market segments. We think that this significantly overstates any realistic market opportunity for Starlink. As we discuss below, satellite-based connectivity faces physical and technological constraints that are very difficult to overcome in densely populated areas.

Source: Company filings. Data as of June 3, 2026.

Starlink's infrastructure and technical constraints make its services best suited to serving lower-density environments where we estimate that about one-fifth of the global population lives. 

Based on more granular data, we estimate that about 5% of the global population lives in highly dispersed environments, which are least suitable for terrestrial infrastructure and ideally suited for satellite-based connectivity. 

This report focuses on a detailed market sizing analysis for Starlink. Based on even the most simplistic analysis, applying the 5% share discussed above to the $1.6 trillion TAM claimed by SpaceX, we can establish a conservative estimate of at least $80 billion in directly addressable global market for Starlink.     

Doing a similar analysis on US population density shows a similar trend (Exhibit 8), exhibiting a striking concentration of population. According to an analysis by CNT, more than two-thirds of the US population lives in less than 2% of US land areas, and the remaining third lives in 98% of land area.

Source: Morningstar estimates, US Census Bureau. Data as of Dec. 31, 2021.

The biggest structural difference between a scaled satellite network operator like Starlink and traditional cable, fiber, or wireless operators is that an investment in SpaceX’s orbital telecom infrastructure increases utility for all users globally, whereas investments by fixed-line and wireless operators apply locally. 

An important consideration for Starlink is to accommodate its potential to serve customers globally and the impact of that dynamic on its unit economics. Starlink is already gaining meaningful market share among customers switching internet providers in rural areas of countries such as Australia, Indonesia, and the Philippines.

These are all countries where rural populations are sparsely distributed, and existing connectivity infrastructure is weak. 

Source: Opensignal, Morningstar. Data as of Dec. 31, 2025.

We note that Starlink's unit economics are not equally attractive across all geographies. 

The cost of serving a subscriber is driven primarily by the satellite constellation, launch infrastructure, and network operations, which are largely independent of income levels across countries. In other words, the costs of serving a customer in the US are similar to those of serving a customer in Africa. 

However, consumers' ability and willingness to pay for connectivity varies dramatically across markets. For instance, we see wireless ARPUs in a developed market like the US around $65 per month, while comparable figures in lower-income countries such as India are often as low as $3 per month. 

Even with a consistent average cost to serve a global user base, we think lower available unit revenue constrains Starlink's long-term global market opportunity. Although the service may be technically available worldwide, many use cases in lower-income markets may not support pricing levels sufficient to generate attractive returns, limiting the portion of the global population that is realistically addressable. 

Source: Omdia, Morningstar, company filings. Data as of Dec. 31, 2025.

We expect Starlink's main constraint to be its ability to increase capacity in the next few years. Given this dynamic, we think Starlink will prioritize scaling in high-income countries and will be limited to high-impact use cases in lower-income countries for the foreseeable future. 

The chart below shows that Starlink has allocated a larger share of its limited capacity to higher-ARPU countries such as Australia and Canada. This has resulted in relatively lower performance in markets such as Indonesia and the Philippines. 

That said, Starlink's reliability has been steadily improving across all markets as its constellation, capacity, and network infrastructure grow. 

Source: Opensignal, Morningstar. Data as of Jan. 31, 2026.

Connectivity markets vary significantly across countries in terms of population density, income levels, broadband penetration, competitive intensity, regulatory frameworks, and existing telecommunications infrastructure. 

Thus, Starlink's market potential in each could vary considerably. We leveraged the US as our primary analytical framework given the high availability of reliable data. We then extrapolated our findings to other international markets. 

We think the US can serve as a reasonable proxy for other high-income countries, given the maturity of its connectivity market. We adjusted our global estimate to account for less-developed infrastructure (a plus) with lower average revenue per user in developing markets. 

While this approach simplifies a highly diverse global landscape, we believe it provides a reasonable framework to globalize our estimate of Starlink's realistic addressable market. 

Source: Morningstar, OECD, Broadband Portal. Data as of Dec. 31, 2024.

Source: Morningstar, company filings, US Department of Justice, USTelecom, Federal Communications Commission. Data as of Dec. 31, 2025.

As a starting point, we compare the US connectivity market with SpaceX's quoted TAM figure. 

We estimate SpaceX's $1.6 trillion TAM is about 4 times the size of the US connectivity market in 2025. SpaceX's TAM figure appears to aggregate the entire connectivity market across most countries (excluding China and Russia). As we think about extrapolating Starlink's realistic US market opportunity to international markets, we think that the 4 times multiplier is on the optimistic side.

Compared with other global markets, we consider the US as a more favorable market for Starlink due to high household incomes, large sparsely populated regions, high ARPU, strong consumer willingness to pay for premium connectivity, and a regulatory environment that has been supportive of the nation's own preeminent private satellite operator. 

In our opinion, the main reasons for Starlink's market share not being as high in other international markets as the US are the following: 

1. In lower-income countries, affordability is a major constraint and ARPUs are significantly lower than the US. Starlink's cost to provide the service remains roughly similar
2. Other high-income areas like Europe and South Korea have much higher population densities. This makes existing terrestrial networks more competitive.

3. The regulatory environments in many other countries are likely to be less permissive than the US, especially where telecom infrastructure is deemed linked to national security. 

On the other hand, we think the case for Starlink penetration strengthens when we compare the maturity of US infrastructure to that of other countries. Remote areas in many low- and middle-income countries lack basic connectivity services and will benefit significantly from Starlink's service. We expect Starlink to remain a global leader, with a very high share of satellite connectivity services.

Source: SpaceX company filings, Rocketlaunch.org, Brycetech, Morningstar estimates. Data as of Dec. 31, 2025.

Based on our analysis of various international markets, we estimate that Starlink's target high-income population is 850 million, about 2.5 times the US population. This includes relatively high-income regions of the world such as Europe, Canada, South Korea, Australia, and Japan. 

Additionally, we consider that other less densely populated areas within low- and middle-income regions of the world would also represent a sizable market for Starlink, given the lack of alternatives in those areas. We exclude Russia and China from our analysis due to geopolitical concerns.

After accounting for variations in ARPU, population density, prevailing terrestrial connectivity infrastructure, and regulatory regimes, we estimate that Starlink's global market opportunity is about 3 times its US opportunity. 

Our estimate is lower than the 4 times factor implied in SpaceX's quoted TAM, and we think that our estimate gives the firm sufficient credit for penetrating international markets and existing technological constraints. 

Our framework segments the total US connectivity market into three distinct tiers based on how much penetration we think Starlink can achieve in each tier and grounds each tier in the structural economics of satellite versus terrestrial connectivity.

The first tier, which we classify as Niche, represents Starlink's most natural and economically attractive markets. This segment includes customers that terrestrial telecom providers have historically struggled to serve efficiently, such as rural and remote households lacking cable or fiber access, maritime and aviation operators, energy and mining sites, government and defense users in remote regions, as well as specialized applications such as recreational vehicles, disaster recovery, and other emerging Internet of Things connectivity use cases.

What makes this market particularly compelling is that Starlink is often addressing unmet demand rather than competing for existing customers. In many cases, there is no viable terrestrial alternative, which reduces competitive intensity and customer acquisition costs. We expect Starlink to have high penetration and attractive economics in this tier.  

We estimate the Niche Wireless market to be around $3 billion, Niche Broadband market to be around $10 billion and Niche Business Services market to be around $15 billion in the US as of 2025. Adding these numbers together gives us a combined US market size of $28 billion (3+10+15) in the Niche category.        

The second tier, which we classify as Add-on, represents a complementary opportunity primarily within the wireless market. Under this model, Starlink is not a direct substitute for terrestrial mobile networks but rather serves as an extension of existing carrier coverage into areas where terrestrial coverage is weak. The recent partnership between T-Mobile and Starlink provides a useful example. 

 In a model like this, carriers strike a wholesale agreement with Starlink to extend its services to all their customers, or their subscribers can pay an additional monthly fee for satellite connectivity when they move beyond the reach of traditional cellular networks. In this model, traditional mobile carriers manage customer relationships and often (crucially) permit the use of their spectrum, while Starlink provides complementary satellite capacity and receives a small share of the revenue stream.

We project that the Wireless Add-On market size will reach $15 billion. 

The third tier, which we classify as Core Telecom, includes the established markets served by wireless operators, broadband cable and fiber providers, and enterprise networking firms. The fact that Starlink faces structural disadvantages compared with terrestrial networks in densely populated markets supports our view that it would not be able to meaningfully penetrate this segment.

We estimate that the realistic US market size in the Niche tier is $28 billion and the market size in the Wireless Add-On tier is $15 billion. Excluding the Core Telecom segment, we estimate Starlink's market potential at around $43 billion. If we extrapolate this number using a factor of 3 to estimate the global market size, we arrive at a realistic figure of around $129 billion as of 2025.

For a detailed look at the market size within each tier, download the full PDF: Testing the Sky's Limits: Our Realistic Starlink Market Sizing

The SpaceX IPO has put a spotlight on the rocket launch supply chain, sparking investor interest in companies with exposure to the commercial space boom. We see industrial gas firms as a low-risk play on the commercial space race. Although we estimate that the space end market currently accounts for only a low-single-digit percentage of revenue for the three industrial gas firms we cover, we expect it to become a meaningful driver of revenue growth, particularly for Linde LIN.

Source: Company press releases, Morningstar estimates.

Linde is the primary industrial gas supplier to SpaceX, which conducts the majority of commercial space launches. Furthermore, the industrial gas firm has invested in additional capacity to support SpaceX's launches in Texas and Florida. We believe that Linde is poised to capitalize on SpaceX's ambitious launch cadence plans as well as transition from Falcon 9 and Falcon Heavy rockets to more propellant-intensive Starship megarockets. 

• We forecast Linde's space revenue increasing sevenfold over the next five years, helping boost the firm's annualized revenue growth profile by around 100 basis points. That said, we note that revenue growth from space has a higher degree of uncertainty than Linde's other revenue streams. 
• We estimate that the space end market currently accounts for only around 1% of Linde's revenue, but we expect it to grow to around 8% by 2040. 

Industrial gas firms have supplied the space end market for decades. Air Products APD has worked with NASA since 1957, supplying liquid hydrogen and other industrial gases for the Apollo, Space Shuttle, and Orion missions. Linde has supplied liquid oxygen to the Kennedy Space Center since the Apollo program. Nonetheless, the space end market has been a relatively small and largely overlooked part of industrial gas firms' portfolios.  

We expect the SpaceX IPO to change that, putting a major spotlight on the rocket launch supply chain. Although none of the three industrial gas firms we cover (Air Liquide AI, Air Products, and Linde) explicitly disclose their space exposure, we estimate that the space end market currently accounts for a low-single-digit percentage of revenue for all three firms, with Linde being the largest player in absolute dollar terms. 

Source: Morningstar estimates.

All three industrial gas firms we cover play an important role in SpaceX, NASA, and other launches. Linde is currently SpaceX's main partner, serving as the primary supplier of liquid oxygen and liquid nitrogen, as well as other industrial gases, for the launch complexes in Florida and Texas. Air Products plays an important role as a helium supplier, while Air Liquide acts as a supplemental supplier. 

Industrial gas firms have been expanding their capacity to support increasing launch activity at SpaceX's launch sites in Starbase, Texas, as well as the Kennedy Space Center and Cape Canaveral Space Force Base in Florida. 

Linde is expanding its industrial gas facility in Mims, Florida, with additional capacity starting up in the first quarter of 2027, following two previous expansions in 2020 and 2024. In the first quarter of 2026, Linde also started up a new air separation unit, or ASU, in Brownsville, Texas, which will provide liquid oxygen and liquid nitrogen for SpaceX's Starship launches from the Starbase facility. 

Air Products announced a new ASU in Cocoa, Florida, that will produce liquid oxygen, nitrogen, and argon for space launch providers, including SpaceX. Management expects Cocoa ASU to come on-stream in the second half of 2028. 

Industrial gas firms supply propellants for rocket launches, as well as other industrial gases that play an indispensable role in the space end market. For SpaceX's Falcon 9, Falcon Heavy, and Starship launches, propellants (including liquid oxygen, liquid methane, and RP-1 kerosene) account for over 90% of the rocket's total mass at liftoff. 

Industrial gases play a variety of different roles in rocket launches, as illustrated below: 

Although the commercial space launch industry is still in a nascent stage, the total number of launches has already increased meaningfully over the last decade, and the Federal Aviation Administration, or FAA, forecast indicates a further acceleration over the next 10 years. 

Over the next decade, the FAA forecast implies the number of launches will almost triple in the base case scenario and increase fourfold in the bull case scenario. SpaceX is currently responsible for almost 85% of all launches, so we believe that Linde, its main industrial gas partner, is well-positioned to benefit from this expected growth.

Source: FAA Aerospace Forecast Fiscal Years 2025-45. 

In addition to the accelerating increase in the number of launches, we also expect a trend toward more propellant-intensive launches as SpaceX ramps up its Starship megarocket launches. Starship launches use significantly more propellant than Falcon 9 and Falcon Heavy launches.

Source: SpaceX, Wevovler, Morningstar estimates. 

The relative propellant intensity of different SpaceX vehicles is important from the perspective of industrial gas firms, because we forecast SpaceX to quickly ramp up the number of more propellant-intensive Starship launches.

Source: SpaceX, Morningstar estimates. 

We forecast that an increasing number of total launches, combined with a growing share of Starship megarocket launches, will drive tremendous growth in overall demand for propellants such as liquid oxygen and liquid methane. Linde does not supply RP-1 or liquid methane, so we expect liquid oxygen to be the primary driver of revenue growth for the firm.

Source: SpaceX, Morningstar estimates. 

As the largest industrial gas supplier to the space end market and the main partner to SpaceX, we expect Linde to significantly benefit from the accelerating number of commercial space launches as well as the transition to more propellant-intensive Starship megarockets. Linde's management recently said that the company currently supports around 70% of all SpaceX launches. 

Although we expect Linde's market share to gradually decline in the long run, we think the company is by far best positioned to capitalize on the commercial space boom.

Source: FAA Aerospace Forecast Fiscal Years 2025-2045. 

We believe the market underappreciates the upside potential of SpaceX's rapidly increasing launch cadence. We think that Linde's space revenue could increase as much as sevenfold by 2030. While we estimate the space market currently accounts for only about 1% of Linde's revenue, we forecast it could grow to about 8% of total revenue by 2040. 

Linde is rarely cheap, but the stock is currently trading roughly 6% below our fair value estimate, which we consider an attractive entry point for a wide-moat industrial gas firm with a resilient business model, which we also consider a low-risk play on the commercial space race. 

Download as a PDF: Fueling the Future of Space Exploration