The Future of Space Exploration
One of the most iconic moments of the last century occurred on Monday, July 20th 1969, when Neil Armstrong became the first man to walk on the moon. “One small step for man, one giant leap for mankind” is a phrase that will be remembered forever. At that time, the United States was heavily involved in the Space Race- a competition with the Soviet Union to become the first country in history to land a man on the moon. The United States allocated roughly 4.5% of its total national budget towards space exploration. Nowadays, that number is a staggering 0.5%. The result of this significant reduction in funding has paved the way for private companies to take a front seat to space exploration on behalf of the United States, which could eventually result in tremendous profits in the future.
In 2011, NASA retired the space shuttle which prohibited the United States from sending astronauts to the International Space Station from US soil. Instead US Astronauts would have to travel aboard The Soyuz- a Russian spacecraft – in order to reach the ISS. This impediment in NASA’s capabilities has led to a partnership between the US government and the private sector in order to jumpstart a new era in space exploration. Companies like SpaceX are at the forefront of this new partnership and they are among the first private companies to have been awarded a government contract to run missions to the ISS. SpaceX has recently developed technology that allows them to launch a rocket to the ISS, return that rocket to a specified landing pad, and then reuse them for other missions, thus operating at a fraction of the cost of NASA. According to SpaceX’s COO Gwynne Shotwell, the ability to recycle rockets will save them about 30 percent of the cost, which amounts to $18 million for the Falcon 9 rocket that SpaceX manufactures and operates. Since 2012, SpaceX has completed 12 missions to resupply the ISS on behalf of NASA. SpaceX has also recently introduced the Falcon Heavy, the world’s largest rocket, capable of carrying humans to the Moon and hopefully one day to Mars. In 2014 the US had awarded SpaceX a $2.6 billion contract to fly American astronauts into space and just last year secured a $97 million contract to send a military satellite into orbit. The potential future contracts and the revenue that is associated with them could make SpaceX one of the largest corporations in the world.
SpaceX CEO Elon Musk, (also CEO of Tesla and Co-Founder of PayPal) who is well known as a visionary and technological genius, has not been shy about stating his goals for the future of space exploration. His ultimate goal for SpaceX and space exploration as a whole is to colonize Mars. NASA would like to send astronauts to Mars, but according to Musk it is estimated that it would not happen until 2033 and at a cost of approximately $10 billion per person. Congress estimates that between now and then the total cost of such a mission would be somewhere around $500 billion. Musk on the other hand believes that SpaceX could send humans to Mars by 2024 and that he would be able to send 100 humans for $10 billion (or $100 million per human). Musk’s biggest challenge is his lack of money. After the latest round of funding SpaceX has a total value of $21.5 billion, however it still is not enough money to launch a serious campaign dedicated to the “Mars Plan”. Currently SpaceX is a privately-owned company, however if Musk were to take the company public he could theoretically raise enough money to fund his ultimate project. The question is why he hasn’t done it yet.
Although there are reports of a potential IPO sometime next year, Musk is not overly excited about the prospect of SpaceX being publicly-owned. He is fearful that investors will look to focus on short term projects that generate revenue at a faster rate and sacrifice the ultimate goal of colonizing Mars because of the significant resources that it would require. A recent analysis done by analysts at Morgan Stanley estimates that SpaceX could fund its “Mars Plan” through launching hundreds of satellite missions and allocating the profits from those missions to the Mars project. If SpaceX were to take this approach they could potentially keep the company private for the foreseeable future, much to the dismay of hopeful investors.
Today, the only way for the average investor to invest in SpaceX is to invest indirectly through Alphabet Inc. who currently own a 7.5% stake in SpaceX. Alphabet Inc. is the same company that owns Google and YouTube, so having such a successful company having such a large interest in SpaceX demonstrates how investors feel about the future profitability of space exploration. Hopefully the rumors are true and SpaceX will eventually go public but for now this remains the only option to make a profit off of one of the most ambitious companies in recent history.