Investing in Space: Industry enters new era

On site at the 2023 edition of the World Satellite Business Week conference in Paris, France.

Michael Sheetz | CNBC

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Overview: Au revoir, bon temps

I’m wrapping up my time at the World Satellite Business Week conference, after a whirlwind of panels, meetings and more. Paris, lovely as ever, played host to insights from old and new sources, and I could spend the rest of the year writing solely about everything I learned here.

My big takeaway: The “bon temps,” good times, are over – in so far as speedy capital and the competitive landscape are concerned – but we’re not necessarily in bad times for the space sector. Competition is fierce and investors are demanding more for their money, so strategies are about executing and delivering.

A trio of themes emerged from conversations: SpaceX is top dog, the recent satellite malfunctions are putting immense pressure on the insurance market, and it’s more difficult for space companies to raise funds than it has been in years.

1. Bogeyman

SpaceX feels a bit like Voldemort here: Whether it’s the launch or satellite communications markets, SpaceX’s dominance was a hot topic. They’re the bogeyman, evoking more jealous respect than pure fear, however.

SpaceX’s Starlink has disrupted the multi-billion dollar satellite communications landscape, which has really been the playing field of only a few major incumbents for decades. 

And its Falcon rockets are the only game for most launch customers who have hundreds of satellites looking for rides. Aside from those small enough to fly on Rocket Lab’s Electron, it feels like satellite leaders are tapping their watches, eager to see next-generation large rockets begin flying and provide new supply and competition to Falcon. But satellites can’t wait around and SpaceX has made it clear in both words and actions that they’ll fly even competitors of Starlink.

2. Uninsurable

 Viasat’s pair of satellite malfunctions was the next conversation piece. While the company hasn’t made any claims yet, the insurance market ramifications are looming. Here’s a few excerpts from the CFO panel that I moderated on Tuesday, which sum up the situation:

 “There’s only so much capacity in the space market … just like any non-standard type of insurance product, they need to earn a certain amount of money over time … the whole market’s roughly a $750 million [a year] premium market, they’ve now got about a billion dollars of possible losses … can they actually make it up in the future, and is there enough high value assets to insure? Because I think the one issue that creates dysfunction in this insurance market is … do you have enough volume to make up for this loss? And the answer is no, right now. … They’re trying to figure out what 2024 is going to hold.”  – Redwire CFO Jonathan Baliff

 “Also, a lot depends on the size of the placement that you’re looking for … given the size of our current satellites, they’re in the neighborhood of about $10 to $12 million, the interest rates are going up and the insurance premium will likely go up at least in the near term … if you’re trying to place 10 to 12 to 15, you probably have a better situation than if you’re trying to place like half a billion or something like that.” – BlackSky CFO Henry Dubois

 “In the launch insurance market .. our costs have come down, as we now have 40 Electron launches, so it’s a matter of getting that heritage behind you.” – Rocket Lab CFO Adam Spice 

3. Greenbacks

Finally, EXIM made a big splash on the opening day by saying it is processing over $5 billion in space-related financing – and threw the door wide open for more companies in need of funding. The U.S. export credit agency’s Vice Chair Judith Pryor even shouted out members of her team in the crowd, exemplifying EXIM’s eagerness to put money to work in the industry. Last month, two of the biggest deals in the sector, an acquisition and a fundraising, were done by non-American firms and Pryor emphasized EXIM’s goal to finance U.S. projects as a U.S. backer.

This hectic summer of space news has made me realize that there’s never been a more exciting time to be a space reporter than this year. We’re in the thick of it – progress, obstacles, dealmaking and the like – and I don’t expect that to slow down any time soon. If you have anonymous tips, reach out to me via encrypted means, such as CNBC’s Signal number or my Proton email. Au revoir from another great WSBW!

What’s up

  • SES and Starlink partnering to offer combined service, beginning with the cruise operator market. SES CEO Ruy Pinto emphasized that “there is unmet demand that neither of us by ourselves can provide to certain cruise customers,” and noted the companies expect to bring the joint offering to other markets as well. – CNBC
  • SpaceX no longer taking losses on Starlink antennas, with VP Jonathan Hofeller saying the company has “been iterating on our terminal production so much that we’re no longer subsidizing” them. – CNBC
  • FAA chief: Starship launch license could come ‘sometime next month.’ Acting FAA Administrator Polly Trottenbergh said the agency is “optimistic” about issuing the license to SpaceX in October, as the FAA is “working well with them.” – Reuters
  • SpaceX launch market dominance concerns banker, but not the military: Dueling opinions on the company’s near-monopoly on the rocket market came from conferences on either side of the Atlantic. Air Force Secretary Frank Kendall said he’s “not really concerned about” SpaceX’s majority share of the global launch market, while Lazard Managing Director Vikram Nidamaluri thinks “it’s a huge concern” and “probably not healthy” for the commercial side of the industry. – CNBC / SpaceNews
  • NASA leaders admit SLS rocket is ‘unaffordable,’ with senior officials telling the Government Accountability Office that the giant moon rocket currently has “poor measures of cost performance over time” and the overall program lacks transparency. – GAO
  • ULA launches second mission of the year, with its Atlas V rocket carrying the SILENTBARKER mission for the NRO and U.S. Space Force. The satellite is intended to improve the U.S. ability to track and inspect other spacecraft in orbit. – ULA / NRO
  • SpaceX launches 64th mission of the year, with a Falcon 9 rocket carrying 21 Starlink satellites into orbit from California. This was the 11th flight of that Falcon 9 booster. – SpaceflightNow
  • Terran Orbital opens California facility expansion that adds 60,000 square feet of manufacturing space to the company’s previous 38,000 square feet of room to build satellites. The company says the expansion will increase its capability to more than 20 satellites per month. – Terran Orbital
  • Law firm DLA Piper announces space practice: The group will be led by Houston-based partner Christian Ford, who said “DLA Piper recognizes the industry’s promising future and is scaling global teams and resources to help commercial space companies succeed.” – DLA Piper
  • Axiom’s third mission to feature trio of European customers: The company announced the Ax-3 flight to the ISS, set to launch in January, will fly astronauts from Italy, Turkey, and Sweden via the European Space Agency. Axiom
  • Germany to sign Artemis Accords, becoming the latest nation to sign the cooperative space agreement that’s led by the U.S. – SpacePolicyOnline
  • Rocket Lab testing Neutron upper stage tank, preparing to test a Stage 2 tank to demonstrate and verify structural integrity. – Read more
  • Blue Origin reportedly targets early next month for New Shepard’s return to flight, with the suborbital rocket having remained grounded since its launch failure a year ago. – Ars Technica
  • NASA astronaut Frank Rubio breaks U.S. record for time in space, becoming the American who has flown the longest space mission by surpassing 255 days, ahead of the mark set by NASA’s Mark Vande Hei last year. – collectSPACE

Industry maneuvers

  • Telesat buys 14 launches from SpaceX for its Lightspeed satellite internet constellation, with Falcon 9 missions set to begin in 2026. – CNBC
  • Leidos orders four more of Rocket Lab’s HASTE missions, buying more of the hypersonic rocket variant after the success of the first launch. – Rocket Lab
  • Ball Aerospace wins $486.9 million NASA contract to build a hyperspectral infrared instrument for NOAA’s Geostationary Extended Observations satellite program. – NASA
  • Firefly awarded $18 million NASA lunar contract, to provide “radio frequency calibration services” for the agency’s LuSEE-Night radio telescope during the second Blue Ghost mission, set for 2026. – Firefly Aerospace
  • Relativity further expands at NASA’s Stennis center, with the company signing a lease for the A-2 vertical rocket engine test stand in Mississippi. The company noted it plans to invest $267 million at Stennis. – Relativity
  • Satellite startup SWISSto12 raises about $28 million in debt from UBS to scale its manufacturing. – SWISSto12
  • Momentus raises $5 million from direct ‘at the market’ offering. – Momentus
  • Satellogic and SkyWatch sign partnership, to use imagery from the former’s satellites on the latter’s EarthCache platform. – SkyWatch
  • Thaicom selects Airbus to build a geostationary satellite for launch in 2027, with French operator Eutelsat agreeing to lease half the Thai satellite’s capacity over Asia. – SpaceNews
  • Intelsat signs with Arianespace to launch IS-45 satellite on an Ariane 6 rocket. – Arianespace

Market movers

  • Planet lowers annual forecast for second consecutive quarter when it reported Q3 results, with the company revising its fiscal year 2024 revenue outlook to a range of $216 million to $223 million, or about 15% year-over-year growth. That’s down from the range of $248 million to $268 million in FY24 revenue that Planet gave at the beginning of the year, previously expecting about 35% year-over-year growth. – Planet
  • Redwire given buy rating by Roth Capital, which set a $10 price target implying the stock could more than triple over the next year. – CNBC
  • Astra performs 1-for-15 reverse stock split, as the company moves to avoid a Nasdaq delisting. Shares traded near 20 cents before the split, and between $2 a share and $3 a share after. – Astra

Boldly going

On the horizon

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