Space revisit: the SpaceX IPO is the catalyst, not the trade

Hey {{first_name|Investor}} -

Quick context before we get into it. For the entire month of June, the weekly newsletter is splitting into two parts. Instead of the usual Thursday Tips email, you're getting a Thursday setup on the theme of the week. The Thursday email is still free. If you’re new here, this will give you a taste of the content I write that is usually for Insiders.

Then on Sunday, the deeper read continues with the full basket and the names I'm watching.

This week's theme is space, because the SpaceX S-1 just dropped and the IPO is around the corner.

After reading the S-1, a few things have shifted in how I think about the space theme heading into the IPO.

Starlink looked like the dark horse business hiding inside SpaceX, and the filing reads as a confirmation of that, with about $11.4 billion in 2025 revenue, roughly $4.4 billion in operating income, and revenue growing around 50% year over year. The cash flow story is real, and the LEO chip suppliers riding behind it have been one of the cleanest ways to express the theme through public markets.

Space Domain Awareness is the area I've been talking about across the channel for a while, around debris tracking and the insurability of LEO orbits. The insurance pressure is still building, and the signals are getting clearer every quarter, but the catalysts have been slower to land than I'd expected. It still belongs in the basket, and the reasoning for that lives in Sunday's piece.

The Terafab announcement was the bigger surprise. Tesla, SpaceX, and xAI announcing a joint semiconductor manufacturing facility in East Texas, with phase-one capex in the tens of billions, was not on my map heading into 2026. That changes how I think about the medium-term picture for the existing chip supplier base, even though the near-term picture stays intact for the rest of the decade.

The one I underestimated was the scale of the AI burn inside SpaceX. The S-1 reveals the AI segment lost roughly $6.4 billion in 2025 against about $3.2 billion in revenue, and early 2026 looks structurally similar, with hundreds of millions in revenue against multi-billion-dollar losses. Starlink's cash is feeding that machine, and that flow is going to keep shaping how the consolidated story prints for the next several quarters.

A few names disclosed up front, which is more useful to you than any framework I could put around them.

The first is Filtronic ($FTC.L), a UK AIM-listed company that builds the millimeter-wave amplifiers connecting Starlink's satellites to each other and to ground stations. The second is Rocket Lab ($RKLB), the American launch services and space systems company. The third is Planet Labs ($PL), an earth-observation constellation operator with applications across commercial imaging, defense, and orbital tracking.

Each one sits on a different layer of the broader space stack. The full reasoning for each lives in Sunday's deeper read, behind the paywall.

The IPO itself is going to drop into one of the most pre-loaded passive buyer pools we've seen in a long time. Nasdaq 100 rules allow for relatively fast inclusion for large IPOs, potentially within weeks of pricing. S&P 500 inclusion is already a live topic among index watchers. And Musk himself is locked up for about a year post-IPO, which pushes his first eligible sale window into 2027.

There's a second lockup track for company insiders, directors, and executive officers that runs 180 days. That's the first real information event for the stock, because it's the moment when people closest to the business can finally act on what they know. Before then, you're trading momentum and constrained supply, which tells you something about market sentiment but very little about what the business is actually doing.

Between the index fund machinery and the lockup calendar, a lot of investors are going to end up owning SpaceX whether they think about it or not, and a lot of opinions are going to get formed before there's any real information to support them. I go into more detail about the SpaceX IPO and the lockup mechanics in the YouTube video.

The rest of this email covers the trade most investors are preparing isn't the trade I think actually pays. The interesting positioning isn't SpaceX itself. It's the layer above and the layer below.

The first door is the semiconductor supply chain that runs Starlink and, by extension, the entire LEO ecosystem. Starlink produces tens of thousands of user terminals per day, each one a small electronics factory built around a phased-array antenna. The chip volumes flowing through SpaceX's supplier base are at a scale most investors haven't internalized, and the cost flywheel they sit inside is what's driven user-terminal costs down by well over half since 2022. The interesting question isn't whether SpaceX wins on terminal margins, it's which chip companies sit on the right side of that volume curve, and which ones get squeezed when Terafab eventually shows up.

The second door is Space Domain Awareness, which is the unglamorous infrastructure that keeps the constellation alive once it's in orbit. With tens of thousands of satellites in LEO, the bottleneck shifts from getting them up there to keeping them flying once they arrive. Several space insurance specialists have warned that certain crowded orbits may become effectively uninsurable later this decade without better tracking and active deconfliction. The math is roughly physics: a one-centimeter metal fragment moving at around 17,500 mph carries kinetic energy in the range of a hand grenade. The companies that solve the tracking, the collision modeling, and the active debris management get to charge recurring software margins on top of hardware that defense budgets have already paid for.

Both doors are real, both sit at a layer of the space stack that gets less coverage than SpaceX itself, and both have publicly traded names you can research without waiting for the IPO at all.

If you'd rather get thematic exposure to the space economy without picking individual names, a handful of space-focused funds cover this theme directly, and the first question to answer is whether you want SpaceX itself in the basket or not.

A few products now carry SpaceX exposure through what's called a special purpose vehicle, which is essentially a separate legal entity that owns shares of the private company on behalf of the fund. The Tema Space Innovators ETF ($NASA) is a pure-play space ETF that gets indirect SpaceX exposure through an SPV, with recent holdings showing roughly 10 to 12% of the portfolio in SpaceX alongside top public holdings like Rocket Lab and Planet Labs. The Destiny Tech100 ($DXYZ) holds SpaceX at around 14% of the portfolio but trades as a closed-end fund rather than a standard ETF, which means the share price can sit at a significant premium to the underlying value of the fund's holdings, and that premium can move sharply. A few broader innovation funds also carry meaningful SpaceX positions, though those tend to be crossover or private-equity-style products rather than pure space plays.

Other space-focused funds stay in listed markets and don't carry direct SpaceX exposure. The Procure Space ETF ($UFO) tracks a broad index of publicly traded space companies. The ARK Space and Defense Innovation ETF ($ARKX) is actively managed with a defense-leaning portfolio that includes names like Rocket Lab, Kratos Defense, and Lockheed Martin. The SPDR S&P Kensho Final Frontiers ETF ($ROKT) takes a broader thematic approach across space and frontier sectors using an index of publicly traded companies.

The simplest way to think about the decision: if you want some SpaceX inside the package, NASA is currently the cleanest option among standard space-themed ETFs. If you'd rather skip direct SpaceX exposure and just hold the public space ecosystem around it, UFO or ARKX gives you the broader basket without IPO-specific concentration risk. I'm not telling you which side to land on. The point is that funds that look similar on the surface can have very different underlying exposures, and the choice belongs to you.

One mechanical note worth knowing: funds that hold SpaceX through SPVs or private share vehicles, like NASA and some of the crossover funds, are subject to the transfer and lockup terms on those structures. In practice, that often means they can't freely trade their SpaceX exposure immediately after the IPO, which can make their performance move differently from SpaceX's stock in the first few quarters after listing. Destiny Tech100 sits in a different bucket, since it holds SpaceX directly as part of a closed-end private-tech portfolio, with its own liquidity and premium dynamics.

Sunday picks up exactly here, with the full basket of seven names across both angles, my current holdings, and the reasoning that connects each name to the broader theme. The framework above is the giveaway, and the names live behind the paywall on Sunday.

If you've been thinking about how to position around the SpaceX IPO without buying SpaceX itself, that's the issue you'll want to read.

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Stay disciplined - Koh

Disclaimer: Nothing in this newsletter constitutes investment advice or a recommendation to buy or sell any security. Numbers and observations are as of publication. I may hold positions in companies discussed above. Always do your own research and consult a licensed financial advisor before making investment decisions.