The SpaceX Dragon spaceship docked with the International Space Station late Monday evening—a milestone for the space start-up. Yet ferrying astronauts to and from the space station isn’t how SpaceX will disrupt existing industries.
Crew-1, as the SpaceX human cargo was named, docked successfully with the space station at about 11 p.m. Eastern time. The four-person crew, including Michael Hopkins, Soichi Noguchi, Victor Glover, and Shannon Walker, was the first official manned space mission for SpaceX following its successful test mission taking NASA astronauts Bob Benken and Doug Hurley to and from the station this past summer.
SpaceX, with its pioneering use of reusable rockets, has won billions in launch contracts over its brief history. And its technical prowess amazes space followers. But launch services aren’t what is going to make the company billions of dollars in the future. The internet is.
Launch services might be the company’s day job, but it is moonlighting as a communications company. SpaceX has already launched hundreds of company-made Starlink satellites into low earth orbit with the hope of delivering high-speed internet around the globe. U.S. consumers can sign up for updates from SpaceX regarding when service might be available in a region.
Morgan Stanley analyst Adam Jonas values SpaceX at between $50 billion and $200 billion. Where the correct figure lies in that wide range is largely dependent on the success of the fledgling internet business. “We view SpaceX as four companies: Satellite Launch, Starlink, Earth to Earth, and Deep Space Exploration,” wrote Jonas in a recent research report. Starlink is the biggest driver of his valuation, worth about $40 billion to $130 billion in his best-case scenario.
Starlink, according to Jonas, is also the piece of SpaceX that could eventually go public. That would be one way for investors to benefit from the space economy. But they should pay attention for another reason: competition.
High-speed broadband delivered from space could disrupt existing internet providers. It’s a new idea and doesn’t come up all that often. But as the number of Starlink satellites grows, it will be something investors need to study.
Building a global communications network won’t be easy. Jonas estimates it will cost $170 billion, which includes about $130 billion for user terminals—think advanced satellite dishes—and $40 billion for the actual satellites. Jonas envisions a price of about $50 a month for internet service to make all the economics work. Lower prices are possible in the future as costs for satellites and terminals come down.
Hundreds of millions of people around the globe could use the service eventually, but the range of potential users, along with the range of valuations for SpaceX, is very wide at this point.
All the future value SpaceX might generate, however, is based on a foundation of launch excellence. The company has demonstrated that a couple of times this year. NASA’s willingness to let a commercial enterprise build the rockets and spaceship for manned missions is a huge vote of confidence in SpaceX and the private space industry.
Elon Musk runs both SpaceX and
(ticker: TSLA), but Tesla shareholders don’t directly benefit from SpaceX’s business. Tesla is already the world’s most valuable auto maker, worth roughly $400 billion, and shares were up about 390% year to date, as of Monday’s closing price, far exceeding the comparable gains of the
Dow Jones Industrial Average.
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