Marriott International and
Delta Air Lines
are not offering lunar packages this summer.
is not scraping gold from near-Earth asteroids. Waste Management need not collect our space trash just yet. Fifty years after the world and Walter Cronkite marveled at a grainy feed of man’s first steps on the moon, it is striking how far extraterrestrial commerce hasn’t come.
Contrast the Apollo 11 mission, still the peak of human achievement in space, with the humble birth of the world wide web 30 years ago.
This is unfair, of course. Space is up there; the internet is down here. Apollo 11 cost $175 billion in today’s dollars with no promise of cash flows, leaving government its only patron. The internet, where barriers are low and end markets are vast, is awash in investor cash. And change is afoot. The space economy, boosted by the exploits of dot-com billionaires, is taking shape. Investment opportunities are coming.
When Barron’s scanned space for promising shares for a cover article two years ago, we found aerospace and defense giants that dabble in launches and satellites and a couple of smaller players (Aug. 26, 2017, “New Space Age Offers Promise and Peril for Investors”). A month later,
(ticker: NOC) said it would buy the most promising of these, Orbital ATK. Since our story,
(VSAT), an incumbent in satellite broadband, has returned 34%, seven points more than the S&P 500.
An IPO of a human spaceflight company by the end of 2019…even we didn’t predict this.
Now, Richard Branson says his Virgin Galactic will merge with a shell company,
Social Capital Hedosophia Holdings
(IPOA), which will allow it to sell shares to raise money.
Morgan Stanley analyst Adam Jonas, who started a series of reports on space investment in December 2017, seemed surprised. “An IPO of a human spaceflight company by the end of 2019…even we didn’t predict this,” he wrote the next day.
There is talk of space having a “total addressable market”—Wall Street’s term for the revenue to be fought over in a given year. Estimates are as far-reaching as the stars. Jonas sees $1.1 trillion by 2040, focused largely on broadband, and not including tourism. Jarrod Castle at
says $805 billion by 2030. Space tourism is $3 billion of that, and a speck next to the amount to be made using space for long-haul routes on Earth.
Virgin says its technology could one day shorten trips between Los Angeles and Tokyo from 11 hours to two. If 5% of today’s passengers on flights over 10 hours would be willing to pay $2,500 for such a miracle, they would make a $20 billion market, Castle reckons.
The space economy, keep in mind, is not growing from zero. Considering how television viewers are switching from bundled channels to online streaming services, space might already have its first industry in decline.
(T), which owns a shrinking dish service called DirecTV and plans to start a
(NFLX) rival called HBO Max, said last year it has launched its last satellite.
Nor is space-like flight new. For $5,400 plus 5% tax, Zero Gravity, based in Arlington, Va., will take passengers through dips at high altitude in a modified Boeing 727, rather like kids riding hills in the back of a station wagon before seat belts were common, except here the riders float about the cabin for a half-minute at a time.
Not high enough? World View Enterprises out of Tucson, Ariz., hopes to soon take passengers near the edge of space in a specialized balloon craft for $75,000 a ticket.
Virgin Galactic has filed a slide deck outlining its plans. Phase I involves selling suborbital, 90-minute space flights for $250,000 apiece, with service launching next year. It stresses that it is really selling a four-day experience, including orientation and training; that only 571 people have ever been to space; and that the wealthy will pay handsomely for unique activities. For example, Branson says private islands can rent for $230,000 a week. As the owner of one, he would know.
Blue Origin, owned by Jeff Bezos of
(AMZN), will be Virgin’s chief competitor, but it hasn’t yet nailed down costs or service dates.
If Virgin Galactic stock doesn’t seem grounded enough, there is another way to play space. The better-known Bezos venture, Amazon, said in April it would launch 3,200 satellites to provide zippy internet access to the world.
It is a direct challenge to Elon Musk’s SpaceX and its plan to do the same with satellites called Starlink. In May, Amazon’s cloud business, Amazon Web Services, launched a platform called AWS Ground Station, to connect satellites with the cloud.
Once the whole world is online, the retail side of Amazon will have that many more customers to go after. And Ground Station will turn Amazon’s competitors in satellites into its customers in the cloud, just as AWS does with Netflix, a rival to Amazon in streaming.
Government’s charge into space might have slowed, but the capitalist mission there no longer looks like such a moonshot.
Write to Jack Hough at email@example.com