When SpaceX (SPCX) went public, almost every conversation I heard was about rockets.
That makes sense. Rockets are what we see. And they’re spectacular.
They launch into space. They land themselves. They carry astronauts, satellites and who knows what else.
It’s one of the greatest engineering stories of our lifetime.
But the more I think about the granddaddy of all IPOs, the less I think the rockets are the story.
Maybe they’re just the delivery system.
I didn’t come to this conclusion because I built some complicated financial model.
I came to it because of my lake house.
I Bought Starlink Because I Wanted the New Toy
My family spends a lot of time at our lake house.
We need the internet, and I could’ve gone with one of the traditional providers. It probably would’ve worked just fine.
But Starlink was available, and I wanted to see what all the excitement was about.
So I bought it. And it’s awesome.
I can check the connection from my phone. It’s simple to install. It’s fast.
Most importantly, I never think about it anymore because it just works.
That reminded me of something my friends say about their Teslas.
I’ve never owned one. I’ve ridden in plenty of them, and they’re nice. But my friends who own Teslas don’t just like them. They love them.
They tell everyone else to buy one because once you’ve lived with it, going back feels silly.
I finally understand that feeling.
Using Starlink didn’t make me think more about rockets. It made me think about communications.
Now, airlines are installing it. Boats are equipped with it. Remote businesses are getting nice boosts from it. Emergency responders are deploying it after hurricanes and floods.
Suddenly, I started asking myself a question I hadn’t really considered before.
Why do we still think of SpaceX as a rocket company?
Maybe We’re Asking the Wrong Question
Here’s something that surprised me: Even the experts can’t agree on what kind of company SpaceX is.
Yahoo Finance, using Morningstar’s classifications, calls it an Industrial company in the Aerospace & Defense industry.
Nasdaq, the exchange where SpaceX listed, puts it in the Technology sector, specifically Computer Software: Programming, Data Processing.
MSCI is one of the world’s largest companies that organizes stocks into different categories for investors. It puts SpaceX in the Communication Services sector, specifically in a category called Alternative Carriers.
That’s Wall Street’s name for companies that help move information from one place to another.
Most of us would probably call SpaceX a rocket company.
So, why would anyone call it a communications company?
Because these labels aren’t just for organizing spreadsheets. They shape how millions of investors think about a business.
Sometimes, the category a company belongs in tells you more about where it’s going than where it’s been.
At first, I thought that sounded crazy. Then, I started thinking about it.
What does SpaceX do every day? Yes, it launches rockets.
But those rockets also carry internet service, phone service, GPS signals, government communications, and data around the world.
Now, think about your own phone. When was the last time you actually typed someone’s phone number?
I still remember my grandmother’s phone number from 30 years ago. I couldn’t tell you my best friend’s number today.
I don’t need to know it. I tap his name, and my phone does the rest. That’s a much bigger change than most people realize.
Phone numbers didn’t disappear. They became invisible.
The same thing happened with email. Almost nobody knows what server their email uses. Almost nobody knows Google’s IP address.
You don’t think about how Netflix (NFLX) gets to your TV, either. The technology handles all of that in the background.
Maybe that’s what SpaceX is really building.
Not just rockets, but the next generation of communications infrastructure.
The Opportunity Might Be Much Bigger Than Rockets
This is where I think investors may be missing something.
If every phone, airplane, boat, car, robot, drone and factory can connect directly to satellites, then maybe SpaceX isn’t competing with rocket companies at all.
Maybe it’s competing with the way we’ve built communications infrastructure for the last hundred years.
I’m not saying Verizon (VZ), AT&T (T), and T-Mobile (TMUS) disappear.
They probably own valuable spectrum, infrastructure, and customer relationships that aren’t going away overnight. Governments, banks, and emergency services still rely on phone numbers and traditional networks.
But history is full of technologies that quietly became invisible.
Nobody knows Google’s IP address. Most of us couldn’t tell you where Spotify (SPOT) stores its music. And when you make a FaceTime call, you probably never stop to think about how your voice gets from one phone to another.
It all just works.
That’s why I keep coming back to the same question.
Maybe we’re thinking about SpaceX the wrong way.
What if the rockets aren’t really the product?
What if they’re simply the delivery system for something much bigger?
I don’t know if that’s where the $2 trillion SpaceX is headed. None of us do.
But if the biggest IPO in history is really building the communications network of the next century, I suspect we’re still talking about the wrong part of the business.
Because after all, maybe this was never really a story about phone numbers.
It’s about what happens when a technology gets so good that we stop noticing they’re there.
Are you with me?
Stay sharp,
JC Parets, CMT
Founder, TrendLabs