Should You Buy SpaceX Stock After the Starship V3 Megarocket Launch?

Last week, SpaceX successfully tested the launch capabilities of its Starship megarocket. It had been seven months since the last test launch, a delay caused by a variety of technical challenges, including the destruction of the rocket's massive booster during a November test.

Millions of eyes are now tracking SpaceX's every move, given that the space stock is hoping to execute an IPO this summer, perhaps as early as next month. There are already several ways to buy into SpaceX today. But by far the easiest route will be to simply wait until shares trade on public markets.

It's hard to overstate how critical the Starship megarocket is to SpaceX's long-term success. In fact, I think the viability and timeline of this rocket are key to whether investors should participate in the looming SpaceX IPO for one important reason.

Image source: Getty Images.

The SpaceX IPO relies heavily on the success of the Starship rocket

Perusing the SpaceX IPO prospectus, a few eyebrow-raising things pop out. The biggest of which is the boldness of the company's growth ambitions. Led by founder Elon Musk, SpaceX aims to pioneer several unprecedented markets. It wants to establish a permanent human base on the moon, for example. It also wants to launch data centers into space -- so-called "orbital data centers", or ODCs. It also wants to continue scaling its Starlink satellite internet service, adding new capabilities such as a global cellphone service powered by its low-earth-orbit satellite network.

In short, SpaceX's growth ambitions rely on its ability to launch a huge number of giant payloads into space consistently and cheaply. That's exactly what the Starship megarocket would allow it to do.

"Space exploration has always been expensive, but recent advancements by private companies like SpaceX are revolutionizing the industry," observes one industry report. "One of the most significant recent developments is SpaceX's Starship, which promises substantial cost savings compared to alternative launch options due to the reusability of both the booster and the upper stage."

Despite having a higher payload capacity, SpaceX's Starship is already significantly cheaper than NASA's Space Launch System, or SLS. Each SLS launch costs roughly $2 billion, while the initial Starship launches are estimated to cost only $100 million. Musk has even claimed that he wants the cost of a Starship launch to eventually scale down to just $10 million.

The successful development and launch of the Starship megarocket is critical to making any of SpaceX's growth ambitions possible. The latest successful test launch is all great news for the company as its IPO approaches.

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