The Race for Space: Virgin Galactic vs SpaceX vs Blue Origin

Today, the 51st anniversary of the Apollo moon landing in 1969, Jeff Bezos will take off in New Shephard to enter space 62 miles (100km) above the Earth’s surface for a mission estimated to last about 10 minutes.  Peter McNally, Global Sector Lead for industrial companies at global research firm, Third Bridge, has offered the following broader perspectives on the development of space

The investor value in the space race is far greater than space tourism

 

Space is part of the broader transformation we are witnessing in aerospace and transportation development.  There are two aspects about the space race to keep in mind–one is commercial and the other is consumer.  From a commercial perspective, space is creating opportunities in companies in communications and is emerging as a field for military applications.  Space tourism is targeting consumers, but today, it is dealing with small numbers of potential passengers.  However, when considering space tourism as part of the broader field of transportation, some of the space applications can and will be used in areas such as supersonic air travel.  Supersonic is re-emerging as an industry opportunity after nearly 20 years since the Concorde was grounded with recent orders from major airlines.  So, space tourism may be “window dressing” to some but it is one part of the larger developments in aerospace and transportation.

 

SpaceX, Blue Origin and Virgin Galactic each have different strategies 

 

At one extreme, we have SpaceX with the ultimate goal of colonizing Mars.  Between here and there, the company is conducting repeat missions for NASA delivering both cargo and astronauts to the International Space Station, launching satellites, and developing its own spacecraft and rockets.  SpaceX has technology that is at least a generation ahead of its competitors to go with its strong commercial revenue and substantial capital backing the company.

 

At the other end of the spectrum, we see Virgin Galactic, who after its recent successful mission of taking tourists to space, announced another capital raise of US$500 million to fund its ongoing business development.  In between, we find Blue Origin that is developing reusable rockets to serve civil, commercial and defence customers, and while they have a broader target market than Virgin Galactic’s current plan, the company backed by Jeff Bezos has yet to put anything into orbit.

 

It is also worth noting that some of these companies have different definitions as to what defines outer space.  On July 20, Blue Origin’s New Shepard spacecraft will fly above what is known as the Karman line–100km above the Earth’s sea level.  Virgin Galactic’s crew flew to 86km above the Earth.

 

Space-tourism and the environment

 

Similar to private aviation, space tourism is neither cheap to the consumer nor is it environmentally friendly.  However, the industry is investing in both reusable rockets and spacecraft as well as more advanced materials to reduce the impact on the environment.

 

What will the space industry look like in 10 years time?

 

What we can say with certainty is there will be more activity in space in the coming 10 years. There are two important developments in recent years that are setting the industry on an upward trajectory.  First, there is the rise of small launchers.  Before this period, if a person or an object wanted to get to space, the mission was dependent on government or quasi-government agencies.  SpaceX has emerged as a leading provider of launch services but companies like Relativity Space and Rocket Lab are starting to nip at their heels.

 

Second, the amount of private capital backing the industry is on the rise, and space is no longer entirely subject to the whims of government budgets.  Capital is available to a wide range of companies, and markets are facilitating investments in space, which would be a multi-trillion dollar industry in the next 10 to 20 years.  While three billionaires are garnering lots of attention with their efforts to conquer outer space, there is a bigger ecosystem of companies and innovators who are using investor capital to push the envelope of what is possible.

 

 

Third Bridge is a global primary research firm that interviews more than 6000 internationally recognised industry experts and business leaders a year to compile market intelligence for institutional investors.  Please do not hesitate if you would like to speak with Peter at any point.