You Might Be Able to Invest in the Starlab Space Station -- but Should You?

After more than a quarter-century in service, the International Space Station is ready for its last hurrah. Sometime after 2030, the space agency plans to pay Elon Musk's SpaceX $850 million to push ISS out of orbit and into the ocean. It's sad news -- but here's the good news:

America is building a new international space station, this time owned and operated by private companies -- private international companies -- to replace ISS. Several teams are competing for the honor, with pole position likely held by Starlab, a consortium led by Voyager Technologies (NYSE: VOYG) and including partners such as Hilton Worldwide, Leidos, Northrop Grumman, and Palantir.

And now here's (potentially) the best part: You may be able to invest in Starlab directly.

Image source: Getty Images.

How to buy a space station in three easy steps

Rumors are circulating regarding an effort to raise $300 million in "Series A" funding for the Starlab joint venture. Series A is the term of art for the first major funding round after a start-up company has exhausted its "seed capital" financing. Multiple institutional investors have already confirmed they're contributing capital to the funding round. If you're looking for an opportunity to get in on the "ground floor" of a space station company -- this may be it.

But "getting in" might not be easy. To participate in Starlab's funding round (assuming it happens), you first need to find a private investment company that has been invited to participate. I personally know of one such company, but don't have permission to name it publicly -- so I won't. (But it is out there.)

Next, you need to find out the price.

Starlab is seeking to raise $300 million by selling "preferred units" (not exactly stock, but similar) in the joint venture. Each unit is reportedly valued near $90,000, and the company as a whole is valued at $950 million prior to the Series A (and could be worth $1.25 billion afterward).

Finally, you should decide if that price is "worth it."

Should you invest (if you can)?

For me, that's the real question, because I'm not convinced investing directly in the Starlab joint venture is the best route -- even if that's an option for you.

Consider: Starlab has received $211 million in grant funding from NASA, and a further $15 million from the Texas Space Commission, plus tens of millions in capital contributions from several of its joint venture partners. But according to the latest data from S&P Global Market Intelligence, Starlab has no revenue -- much less profit -- yet. That's not surprising, seeing as the joint venture hasn't yet built or launched the space station it needs to generate the revenue -- but it does raise the risk of investing in Starlab.

Starlab probably won't begin generating revenue until after its space station reaches orbit, which is scheduled for no earlier than 2029, and cannot happen until SpaceX makes a Starship rocket available for launch. Starlab does, however, have $500 million in commercial reservations from potential customers, and says there's pent-up demand for further contracts.

Whether that's enough demand to justify the estimated $2.8 billion to $3.3 billion it will cost to build and launch the station -- and earn a profit -- remains to be seen.

A better way to invest in Starlab?

For now, there's not much transparency around an investment in the Starlab joint venture. And for this reason, it may make sense for individual investors to focus instead on investing in one or more of the publicly traded companies that comprise the Starlab joint venture. Those, at least, must file financial statements with the SEC, giving investors a clearer view of their path to profitability.

Thinking along this line, the most logical stock to consider investing in is Voyager, the company leading the development of Starlab.

Mind you, Voyager isn't profitable either. But it does have revenue -- about $174 million generated over the past year, primarily from its defense and national security division. At a recent market capitalization of just over $1.5 billion, that means Voyager stock has an 8.9 times price-to-sales ratio.

That isn't cheap for a space stock -- yet. But analysts have Voyager pegged for more than $291 million in total sales through the end of this year, rising to $518 million next year, and $982 million the year after that. By 2029, the earliest date we might expect to see Starlab in orbit, they predict Voyager will be doing nearly $1.9 billion in annual sales -- and finally earn its first profit.

Assuming you can wait that long, then today's valuation of less than 1x 2029 sales could be cheap enough to make Voyager stock a winning investment.

Rich Smith has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Leidos, Northrop Grumman, and Palantir Technologies. The Motley Fool recommends Voyager Technologies. The Motley Fool has a disclosure policy.