How Space Technology Will Trump Social Media IPOs
[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),
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