The U.S. Space Force awarded SpaceX a $2.29 billion fixed-price contract to build a prototype of its "Space Data Network Backbone" project. This project plans to deploy a large-scale satellite network in low Earth orbit to provide the Pentagon with high-speed communication capabilities, with delivery scheduled for the end of 2027.
Military orders continue to expand
U.S. Space Force officials stated that this network will become a crucial communications layer in the operational system, connecting sensors and strike systems globally. Based on publicly available data, this contract represents approximately 18% of the U.S. Space Systems Command's $15.6 billion space procurement budget.
Hours before the contract announcement, the Pentagon publicly stated that SpaceX was a "strong and important partner." This statement came after Reuters revealed that the two sides had disagreed on pricing for the Starlink service. The report mentioned that the dispute involved the Starlink service deployed on LUCAS drones, but a U.S. Department of Defense spokesperson subsequently denied that the claims were accurate.
- A total of 218 federal contracts were awarded between fiscal years 2023 and 2025.
- Government business is projected to account for approximately 20% of total revenue by 2025.
- Aerospace business revenue is highly dependent on fixed-price contracts
IPO expectations drive sector strength
Beyond the large military contract, the market is also closely watching SpaceX's IPO progress. Reports indicate the company has filed for an IPO and could list as early as June. If all goes smoothly, this would be one of the most anticipated US tech IPOs in recent years.
According to reports, SpaceX plans to raise up to $80 billion, potentially reaching a valuation of $2 trillion. As expectations for its IPO rise, companies in the space industry chain are also attracting investment. Bloomberg Intelligence analysts say that several ETFs offering exposure to SpaceX before its IPO have recently seen inflows.
Starships remain a long-term investment focus.
Aside from government contracts and an IPO, the Starship project remains a long-term investment focus for SpaceX. The company hopes to further reduce launch costs and improve its ability to deliver large payloads into orbit with this large, reusable rocket. Public information shows that SpaceX has invested more than $15 billion in Starship development to date.
Last Friday, Starship completed its latest test flight. This was the maiden flight of the new version, consisting of the Starship spacecraft and the Super Heavy V3 booster. During the test, the rocket successfully deployed two improved Starlink satellites and 20 simulators, but experienced some engine failures and ultimately splashed down in the Indian Ocean to complete the test.
Space-related stocks generally rose on Tuesday, driven by expectations of SpaceX's IPO. Redwire and Momentus rose 26% and 75% respectively during the session, AST SpaceMobile rose 18%, Rocket Lab rose 5%, and many other related stocks also recorded significant gains.
