Prediction: Stoke Space Will IPO in 2027

Stoke Space has not said it will go public in 2027 -- but I will. Based on all we know about the state of the space market right now, it's my considered opinion that before the end of next year, space investors will have a new space stock to invest in.

And now I'll tell you why.

Image source: Getty Images.

Introducing Stoke Space

If you haven't heard of Stoke Space yet, that's not surprising. Privately held Stoke Space is a space start-up that's... still starting up. As in, Stoke hasn't even launched a rocket yet, much less made it to orbit or proven (as it's promised to do) that its rockets are reusable like Elon Musk's Falcon 9.

Stoke calls its new rocket "Nova," an "ultra-high launch-cadence, 100% reusable rocket." The first version, Nova Pathfinder, will be powered by seven Zenith liquid natural gas/liquid oxygen rockets that can lift 2.5 metric tons of cargo to low earth orbit (LEO). That's 2.5 times the payload of the German Isar Aerospace rocket that just made a successful test flight from Norway last week -- and it's only Stoke's "technology demonstrator."

Once Pathfinder has proven its ability, Nova will switch to developing a Nova Block 2 rocket, six times as powerful. This one will feature 14 Zenith engines, each tweaked to provide more than twice the thrust of the original, resulting in a total payload to LEO of 15 tons.

What's new at Stoke?

This week, Stoke Space announced it has just raised $1 billion in a Series E round of private funding. The company said the funds will "support" its first orbital launch, expand production and launch capacity, and also "accelerate development" of the Nova Block 2 launch vehicle.

But first things first.

The first use of the new funds will be to launch Nova Pathfinder, and Stoke is targeting a first launch attempt in "early 2027." Although details on the mission are scant, Stoke stated in a press release that Nova Pathfinder will demonstrate "core architecture, full reuse technologies, and operational capabilities," implying that the mission may carry a commercial payload -- and will also attempt to land back on Earth after deploying it.

It's not 100% clear how many missions Nova Pathfinder will fly before the company transitions to the larger Nova Block 2. The first flight for Nova Block 2 is scheduled for 2029. Production and flight cadence will increase only after Nova Block 2 arrives.

When might Stoke Space IPO?

Why does all of this imply a near-term initial public offering (IPO) for Stoke Space? Consider first the competitive landscape. According to data from S&P Global Market Intelligence, Stoke Space set up shop in 2019 -- 17 years after Space Exploration Technologies (NASDAQ: SPCX) and 19 years after Blue Origin began their own race to space.

Both of those companies have rockets flying today -- much bigger rockets than Stoke's Nova Pathfinder or even the Nova Block 2 it hopes to build a few years from now. (Indeed, SpaceX's Starship will be nearly one full order of magnitude bigger, with estimates boasting a payload to LEO of as much as 150 tons.)

So even before it gets its first rocket launched, Stoke Space is already trailing the leaders badly.

Beyond these leaders, Stoke will also face competition from companies like United Launch Alliance and Arianespace, space incumbents that have been launching rockets for years, as well as from fellow new-space companies such as Rocket Lab (NASDAQ: RKLB).

First launched in 2017, Rocket Lab's small Electron rocket has been flying nearly as long as Stoke Space has not been flying. Rocket Lab's newest rocket, the Neutron, with 13 tons of payload to LEO, will be nearly as big as Nova Block 2 -- and is expected to launch early next year, giving Rocket Lab a two-year head start on Stoke.

Of the space companies named above, only Blue Origin -- and Stoke -- are fully private. SpaceX and Rocket Lab are already public, while ULA and Ariane are owned by publicly traded companies, giving them access to easy funding through share issuance. (And even Blue Origin may be considering an IPO of its own.)

If Stoke hopes to break into the space business with Nova -- a rocket that has not actually flown yet -- and compete with rivals that not only have operational rockets and vastly more space experience than Stoke but also access to easier financing, I think it's highly likely Stoke will conclude that it, too, must IPO.

And sooner would be better than later.

Rich Smith has positions in Rocket Lab. The Motley Fool has positions in and recommends Rocket Lab. The Motley Fool has a disclosure policy.