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SpaceX is back in the news, creating hope for aspiring astronauts with a test of part of its Starship system, meant to eventually take crews to the moon, to Mars, and beyond.

The trial liftoff and landing also has the potential to fuel investors dreams of finding the next big thing. Space investing and the low-earth-orbit economy are still in the early stages of development.

In April, NASA selected SpaceXalong with two other teamsto develop landing vehicles for the 2024 Artemis moon missions. SpaceX is developing a reusable systemnamed Starshipthat integrates a powerful rocket and lander. Tuesdays test was an early milestone in Starships development.

During the test, part of the craft lifted off, rose 150 meters, and landed safely. It was another feather in the cap of SpaceX, whose 2020 achievements have been, frankly, breathtaking.

This past Sunday, the company completed a two-month mission qualifying it to ferry astronauts to and from the International Space Station. Its also delivered many satellites to low earth orbit, which will enable the company to eventually offer high-speed, space-based internet access to earthlings.

SpaceX is no small player. The company is valued at $30 to $40 billion in private markets, but some people see the potential for much more.

Morgan Stanley analyst Adam Jonas for starters thinks the company, headed by Tesla (TSLA) CEO Elon Musk, could be worth up to $150 billion, although that value is mainly dependent on a successful internet business. He doesnt have much value assigned to deep space exploration.

Our views around deep space exploration are largely qualitative at this point, wrote Jonas in a July research report.

There arent a lot of business opportunities in deep space yet, but that is changing. There was the Starship test. NASA is also spending money. Aerojet Rocketdyne (AJRD), for instance, makes the rocket engines for the huge NASA space launch systemor SLSwhich is the backbone of the agencys plans for deep space exploration. SLS will be the most powerful rocket NASA has built.

The SLS is slated to launch for the first time in late 2021. Early missions will deliver cargoes to the moon. Space craft traveling that far have to be accelerated to 24,500 miles an hour to break out of low earth orbit.

Jonas, of course, doesnt cover SpaceX. He does cover the space tourism company Virgin Galactic (SPCE). He rates those shares at Buy and has a target of $24 for the stock price.

Aerojet Rocketdyne shares are down about 7% year to date, a little worse than comparable returns of the S&P 500 and Dow Jones Industrial Average. Virgin Galactic shares have soared 70%.

Tesla has done better than both, up more than 250%. There is no connection between Tesla and SpaceX beyond Musk. But Musk matters. SpaceX generates a lot of free advertising for the electric- vehicle maker, saving the car maker billions of dollars each year.

Write to Al Root at allen.root@dowjones.com

Originally posted here:

SpaceX Took a First Small Step to Mars. That's Great News for Space Investors. - Barron's