Many people have long argued that space exploration belongs in the public sector. In addition to being expensive, space exploration has unclear economic returns, which are repugnant to profit-driven businesses. Additionally, some fear that private sector participation in space may taint pure research and result in unchecked land grabs that will be challenging to resolve in terrestrial courtrooms.
However, since the beginning of space exploration, private sector involvement in space has been a reality. The Saturn V rocket was constructed by Boeing and its allies, not NASA.
Similarly, commercial businesses have produced vehicles and equipment for NASA, the European Space Agency, and other programmes as well as built, launched, and managed satellites for decades.
Once the Domain of Giants
A small but consistent amount of exposure to space has always been available to investors. Rockets, spacecraft, satellites, and a wide range of other systems are built by Boeing (BA), Lockheed Martin (LMT), and Northrop Grumman (NOC) for use in operating space programmes.
However, the impact of this space-based revenue on the company’s overall profitability is rarely obvious or significant. Additionally, it might be challenging to distinguish between “space revenue” and “defence revenue” because this revenue is frequently connected to military initiatives.
Additionally, for many businesses, the money NASA spends on space research is not a substantial top-line sales driver. In the past, NASA has traditionally spent around 80% of its budget on contracts.
In 2022, it expects to spend around $24.8 billion.About $20 billion is still available for procurement, which is normally divided among many businesses. In contrast, Boeing reported revenue of $62.3 billion in 2021.
As a result, it is difficult to conclude that purchasing Boeing constitutes a true investment in space exploration.
In with the New
The new generation of space travellers stand out for their aspirational spirit. Virgin Galactic and SpaceX are two of the best-known companies (SPCE).
Elon Musk founded SpaceX, which made history in 2012 by becoming the first private business to deploy a resupply craft to the International Space Station (ISS).
It was the first time a commercially made spacecraft sent two NASA astronauts to the International Space Station (ISS) in May 2020.
But SpaceX aspires to be more than just NASA’s equivalent of Grubhub and Uber. In order to dramatically lower the cost of space exploration, it is creating reusable launch systems.
The Starship, a long-duration vessel Musk thinks may one day deliver a crewed trip to Mars, is its most ambitious endeavour.
Another initiative is Starlink, which aims to deliver universal broadband internet access by launching up to 42,000 satellites into low-Earth orbit.
Richard Branson, a multibillionaire, established Virgin Galactic with less aspirational goals.
High-net-worth individuals will be taken into space for short periods of time by the corporation in order to see the earth and experience weightlessness for a few minutes. Virgin Galactic announced approximately 700 reservations and $90 million in deposits at the end of 2021.
Each ticket is around $450,000. The SpaceShipTwo, a reusable spaceship, is transported to a height of 45,000 feet by the Mothership as part of Virgin Galactic’s launch system. The two-person crew of the SpaceShipTwo and its six passengers will have about 90 minutes of flight time after disengaging from the Mothership.
Virgin Galactic and NASA established a partnership to create a service that would carry paying, private travellers to the International Space Station (ISS) in June 2020.
In October 2019, Virgin Galactic made its NYSE debut thanks to a $800 million investment from a special purpose acquisition company (SPAC).
It reported $3.29 million in sales and $352.89 million in losses for the year 2021. It had a $128.92 million cash loss at the end of the year.
The Bottom Line
Despite the advancements made by commercial space enterprises, Virgin Galactic remains the only meaningful investment option available to investors that is directly related to space and space research. To maintain that investment stance, commercialised space just makes up too little of what organisations like Boeing and Northrop Grumman do.
Although there is speculation that Elon Musk’s SpaceX will go public, Musk has said the company should stay private since its long-term objectives clash with those of the stock market. Investors looking to profit from the upcoming initial public offering (IPO) led by Elon Musk are not helped by this at the moment.
However, a time may come when investors can support a variety of space companies, including asteroid mining, suborbital spacecraft, commercial launch services, spacecraft makers, and interplanetary travel. However, for the time being, investors are kept on solid ground by the gravity of earnings, feasible addressable markets, and sustainable returns on capital.
