How Space Technology Will Trump Social Media IPOs

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Nov 11th, 2011 | By | Category: Featured, Investing Strategies, Technology
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[Editor’s Note: Forget about trendy social media stocks. Space Exploration Technologies, more commonly known as SpaceX — with its revolutionary civilian space capsule and reusable rocket technology — is readying its initial public offering for 2012.

Today, Ray Blanco joins us to talk about the astounding technology that SpaceX is working on right now... and reasons why you should keep this company on your radar as a potential investment when it becomes public.]

The greatest hindrance to increased space access and exploration is an economically simple one: high costs.

Efforts by national governments via their space programs have only been able to make human space flight rare and expensive. If a permanent, long-term human presence off the planet is ever to happen, we will need to reduce launch costs to a fraction of what we pay today.

A large part of the high cost of space flight is, of course, hardware. If commercial transoceanic flights involved the scrapping of a jumbo jet for each trip, we’d still be using ocean liners. However, with the exception of the now-defunct space shuttle, all orbital launch systems are good for a single trip only.

Once a payload is placed into orbit, the rest of the rocket falls to Earth, never to be used again, so each trip requires the construction of a brand-new vehicle.

Successful reuse of launch vehicles is, therefore, hugely important.

In late October, SpaceX founder and CEO Elon Musk announced that the revolutionary space access company would work on making its vehicles fully reusable. Already, SpaceX is stringing up an impressive list of firsts. Last year, it was the first private company in history to launch and successfully return an unmanned space capsule from orbit.

As it stands, SpaceX has demonstrated it can reduce launch costs to a fraction of the going rates. It has won a huge contract to launch the next generation of Iridium communications satellites as well as NASA contracts to resupply the International Space Station.

SpaceX’s largest (and as yet untested) launcher design promises launch costs at around $850 a pound. This is less than a 10th of the cost of Boeing’s Delta IV Heavy, and at 53 tons of payload, Falcon Heavy can launch more than twice as much hardware.

SpaceX filed for FAA permission to test fly a reusable suborbital vehicle called Grasshopper. Grasshopper will have a single Merlin rocket engine of the same basic type as the Falcon vehicle and will test the ability to vertically land a rocket after launch.

The knowledge SpaceX gleans from the Grasshopper vehicle will then be used to make its orbital vehicles fully reusable. Concurrently, with Elon Musk’s presentation before the National Press Club last month, SpaceX released a video demonstrating its vision of how it hoped to achieve full vehicle reusability.

According to Musk, if a Falcon rocket cost $50 million to build and could be reused 1,000 times, the capital cost per flight would be only $50,000. Even adding in maintenance, fixed and fuel costs, launch costs could be brought down 100-fold.

Ironically, reduction of NASA budgets is spurring the creation of new superior space access vehicles that make far better economic sense. In the course of only four years, SpaceX developed Falcon 9, an entire platform capable of putting humans into orbit for only $300 million. If NASA had handled this, $300 million would have gone only so far as to develop a single subassembly of a launch system. Moreover, the company claims that it has been profitable every year since 2007.

Right now, the company’s biggest threat is not competition on economic or technological terms, but political favoritism. Large defense contractors such as Boeing and Lockheed Martin have a lobbying clout that SpaceX cannot hope to match.

But in the end, superior technology will usually win the day…

Ad lucrum per scientia (toward wealth through science),

Ray Blanco
for The Penny Sleuth


Author Image for Ray Blanco

Ray Blanco

While other eighth graders were out playing soccer, Ray Blanco was in his basement learning how to build what’s called a “Wilson Cloud Chamber” – a supercooled device for detecting particles of ionizing radiation. Now, he is an expert in advanced robotics, avionics, genomics, and biotechnology. Blanco was raised in Miami, FL, after his family fled Cuba in the 1960s. He is co-editor of Technology Profits Confidential and contributes to Breakthrough Technology Alert.

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4 comments
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  1. I accept all advice,rules.Thanks for your intructions keep it up guide me where ever I’m wrong as usually.

  2. Space companies definitely have potential of earning much more than social media companies. As a space entrepreneur and aerospace engineer, I know that the resources out there are unimaginably greater than the ones sitting on just one planet or in our computers. The first step is bringing down launch costs so that more space activities can occur up there. I foresee the future of space development as follows:

    1. Suborbital Space Tourism/Science + Reusable Orbital Space Launch Vehicles
    2. Commercial Space Stations + Orbital Space Tourism/Science
    3. Orbital Space Manufacturing + Manned Lunar Exploration and Settlement

    I’m very hopeful that we can reach Step 3 by the end of the next decade, i.e. year 2030. As Peter Diamondis has written in Abundance, the future can be quite bright when new technologies incite major cost reductions on previous bottlenecks. Right now,the biggest hurdle is a cheap way of escaping Earth’s gravity. Space X is doing an excellent job pushing that along and other commercial space companies are sure to follow if they are to compete.

    My interest here is to push research and education for space. This is why started a space company dedicated to the ultimate purpose of creating an educational and research institution. I hope that as my company grows, we can develop technology which will aid every step among the three I listed as well as generating the human capital to do it.

  3. [...] As Ray Blanco said as far back as Nov 11th, 2011 in the issue “How Space Technology Will Trump Social Media IPOs”: [...]

  4. So, how can I get started to invest (a small amount) in Space-X’s IPO?
    Thanks,
    Gene

    3329 View Pointe Dr.
    Westlake Village, CA 91361
    818-874-1419 Home

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