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Hello, Reader.
In Ernest Hemingway’s 1952 novel, The Old Man and the Sea, a fisherman named Santiago sails out into the Gulf Stream’s deep waters, where he discovers a giant marlin.
After many sleepless nights, he finally catches the marlin and lashes it to the side of his boat… only to see sharks devour it on the journey home.
Santiago is left with nothing but its skeleton.
The market is going after its own giant marlin this week: SpaceX.
Elon Musk’s space exploration company is targeting a June 12 Nasdaq debut at a $1.75 trillion valuation, which would make it the largest IPO in history. Talk about a big fish.
Come Friday, thousands of investors – maybe millions – will drop a line in the water to snag this prize catch. But landing that fish profitably will be no easy task. From the moment SpaceX goes public, competitors will circle the company to take a bite out of its ambitions. In the early days, SpaceX’s share price will likely lose some flesh off the bones.
Admittedly, SpaceX is a marvel in many ways. But not even a cosmic explorer deserves such a stratospheric valuation. The company is still producing multibillion-dollar losses quarter after quarter. At some point, investors might decide that a $1.75 trillion company should turn a profit.
In the meantime, thanks to the SpaceX IPO, hundreds of billions of dollars in fresh investor attention will pour into the commercial space sector, searching for the companies that build, supply, and enable the new space economy.
Most of that attention will flow toward names investors already know. But the opportunity for the astute speculator lies elsewhere – in the companies doing the unglamorous, essential work that makes missions possible.
Indeed, history suggests the biggest gains often come from the companies operating one step downstream.
In major technological shifts, the companies that capture investors’ attention are rarely the only winners. Their success often helps fuel growth across related businesses.
So, in today’s Smart Money, let’s dig into why investing in the companies downstream of SpaceX is a better choice than buying a stake in the IPO itself.
The Beneficiary Trade Has Worked Before
Ignoring the biggest fish might feel counterintuitive. The advice can even feel downright “fishy.” But history shows that the most visible opportunities are rarely the only, or best, ways to invest in a major trend.
We saw this phenomenon play out with the rise of the internet.
Like SpaceX, Alphabet Inc.’s (GOOG) IPO was highly anticipated. The company went public on August 19, 2004, at $85 per share and generated roughly $1.67 billion. Since then – accounting for two large stock splits – GOOG shares are up by more than 17,000%.
But that remarkable return was only part of the opportunity.
Google’s success helped validate the internet economy as a whole. Investors gained confidence that web-based business models could scale globally and generate enormous profits.
That confidence didn’t benefit Google alone. As businesses increasingly moved online, software delivered through the internet – what we now call software-as-a-service (SaaS) – experienced explosive growth.
Salesforce Inc. (CRM), which went public in June 2004, was one of the biggest beneficiaries. The company priced its shares at $11 and raised about $110 million. Since then, Salesforce shares have climbed 6,355%, adjusted for its 2013 stock split.
Investors who recognized Salesforce as a downstream beneficiary of the internet economy were able to make a similar investment thesis play with far less competition.
Veeva Systems Inc. (VEEV), a cloud-based software company serving the life sciences industry that initially built its customer relationship management (CRM) product on Salesforce’s platform, went public in 2013 at $20 per share. Since then, it has delivered 734% returns, outperforming the S&P 500 and the broader software sector.
In short, Google validated the internet model, Salesforce rode the wave, and then Veeva rode Salesforce’s wave.
Each link in the chain represented a less obvious way to invest in the same underlying trend. And at a more favorable entry point.
SpaceX will likely create the same type of chain.
And when it does, the most attractive investments may not be found in SpaceX itself, but in companies positioned to benefit from the wave that follows.
The Space Economy Is Real – but the Best Stocks Aren’t Obvious
Here is the speculative heart of the thesis: A successful SpaceX IPO at its trillion-dollar-plus valuation would legitimize commercial spaceflight as an investable sector at scale, likely accelerating capital flows to competitors and suppliers alike.
Just as Google’s IPO accelerated investor interest in internet businesses, a landmark SpaceX debut will introduce millions of investors to the idea that space is not just a government program. It is an entire economy.
Many of those investors will want skin in the game. Most will buy SpaceX directly, especially considering how revenue soared by 33% year over year to $18.7 billion last year, driven mainly by a 32% increase in Starlink satellite internet sales.
But growth and investment returns are not always the same thing.
SpaceX also reported a significant GAAP net loss of $4.94 billion for full-year 2025 and a steep $4.28 billion loss in the first quarter of this year – mainly because of Musk’s push into AI infrastructure. (SpaceX invested about $12.7 billion last year in AI capital expenditures.)
Despite its impressive growth, SpaceX is still spending heavily, making near-term profitability unlikely.
That’s why I advise looking for SpaceX-related companies with real revenues, real contracts, and real hardware already in orbit.
I’ve identified a company in aerospace manufacturing that can credibly claim all three, and it’s already up double digits in less than a month since we added it to our portfolio in The Speculator.
I’ve also recently recommended another space-focused company, at The Speculator, on the opposite end of the spectrum. You can think of it as “space investing for chickens.”
Buried inside this very large, very profitable, very boring company is a robotics business with a direct connection to SpaceX. And as the SpaceX IPO approaches, that connection may prove more important than most investors realize.
Hemingway’s Santiago came home with a skeleton. He caught the biggest fish in the Gulf Stream, but had nothing to show for it.
The investors who buy SpaceX on Friday may tell a similar tale. The valuation is stratospheric, the losses are real, and the sharks are already circling.
The smarter play isn’t to chase the marlin. It’s to fish in the waters around it – the smaller, faster-moving fish that the whole ecosystem depends on.
That’s where these two companies live. And in our experience, those are the waters where the real money gets made.
To get the full details of these companies before SpaceX joins them on the stock market, click here to learn how to become a member of The Speculator.
Regards,
Eric Fry
Editor, Smart Money
