By now you may have heard the news: Elon Musk’s Space Exploration Technologies (SPCX +0.45%) company is coming to Louisiana — and bringing a pile of cash along for the ride.

On Aug. 25, SpaceX said it planned to develop a high-volume launch facility for Starship on the Louisiana Gulf Coast. The site will host 10 Starship launch pads, deep-water shipping ports and vehicle processing facilities for receiving cargo, and an airport, and will cost $100 billion to build. It won’t all be spent at once, of course, but construction will begin in 2027, with the first launch pad expected to be operational by 2029, and further work continuing after that.

SpaceX logo.

Image source: The Motley Fool.

Arguably even more important than the infrastructure is the location chosen for Starbase Louisiana.

As far back as May, speculation began floating around that SpaceX was interested in Louisiana. One notable post on X (coincidentally, also owned by Elon Musk and part of SpaceX) said that SpaceX “may have acquired or is acquiring 136k acres (212 sq miles) of marshland” on the Louisiana coast. In a flash of insight, this poster observed that the site in question had access to natural gas pipelines owned by Cheniere Energy (LNG +0.55%) and ExxonMobil (XOM +0.17%) subsidiary Golden Pass LNG.

And why is that important? Well, consider that every Starship launched consumes about 1,040 metric tons of rocket fuel.

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Now, natural gas is primarily composed of methane (as much as 97%). Once purified to remove contaminants such as CO2, oxygen, nitrogen, and other gases, it can be cooled to yield liquid methane — itself the primary component of methalox rocket fuel.

Translation: SpaceX is building its new Starbase atop two gas lines that already exist, and that deliver straight to Elon Musk’s doorstep all the rocket fuel his Starships will ever need.

What this means to investors

Following SpaceX’s confirmation of speculation that it will build its second-ever Starbase in Louisiana, many commenters rushed in to opine on the financial wisdom of the move and on SpaceX’s ability to raise the $100 billion it expects to spend to complete the project.

Neither of which worries me.

Space Exploration Technologies Stock Quote

Space Exploration Technologies

Today’s Change

(0.45%) $0.63

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SpaceX has a market capitalization of $1.9 trillion just a little more than two months after its initial public offering (IPO) in June. More importantly, according to the latest data from S&P Global Market Intelligence, SpaceX already has $100 billion in the bank. If Elon Musk were so inclined, he could literally pre-pay to build Starbase Louisiana today and then take all the time he needs to get the 10 launch pads up and running.

As I’ve stated before, I’m much more concerned about the artificial intelligence (AI) side of SpaceX’s business, and the incredible rate at which it’s burning cash. (S&P estimates more than $50 billion in negative free cash flow this year, for example — and twice that next year.) Until that changes, I’ve honestly got zero interest in investing in SpaceX per se.

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But that doesn’t mean there’s no other way to profit from this Louisiana SpaceX project.

A better way to make money off of SpaceX

I refer, of course, to the two companies we now know will be profiting directly from SpaceX’s project in Louisiana by selling SpaceX the rocket fuel it needs for its Starships: Exxon and Cheniere.

Unlike SpaceX, Cheniere stock is profitable, generating $2.9 billion in generally accepted accounting principles (GAAP) earnings and $2.8 billion in positive free cash flow (FCF) during the past 12 months. Likewise, Exxon — on an even grander scale. During the past 12 months, Exxon earned $32.8 billion and generated $30.6 billion in FCF.

In terms of valuation, both Cheniere and Exxon stocks trade at about 20 times earnings and 21 times FCF. Of the two, I’m inclined to prefer Exxon over Cheniere for its lighter debt load (relative to both market capitalization and earnings), as well as its superior dividend yield of 2.6% — triple Cheniere’s 0.8% dividend yield.

Both stocks, though, stand to benefit mightily from an increase in liquefied natural gas purchases by SpaceX as it constructs Starbase Louisiana — and both look to me like better bargains than SpaceX stock itself.




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Shin John
Shin JohnYtv Market News
Share-market news writer and analyst with deep experience covering equities, commodities, forex, and cryptocurrencies for readers in the USA, UK, Canada, and Australia. Ytv Market News delivers timely market updates, practical trading insights, and clear explanations of macro and company-level catalysts that move prices. Combines on-the-ground financial reporting with technical analysis, using concise charts and actionable ideas to help investors and traders make smarter decisions.