Everyone knows the name of the first man on the Moon and the historic words he spoke there. You may even remember the name of the second man on the Moon. But what about the last man on the Moon? History seems to have forgotten him. In December 1972, Eugene Cernan and his crewmate Harrison Schmitt, astronauts on Apollo 17, spent 22 hours exploring the Moon’s Taurus-Littrow Valley, driving around in the lunar rover (setting a lunar land-speed record of 11.2mph in the process) and collecting over 100 kilograms of rock samples. As Cernan climbed the ladder back into the lunar module, he said: “As I take man’s last step from the surface, back home for some time to come – but we believe not too long”. Little did he know quite how long it would be before humanity returned.
The first journey to the Moon was supposed to be the first step in our inevitable journey to outer space. It would only be a few short years until we were cavorting about a lunar base in shiny jumpsuits and eating super-nutritious space food. From there it would be but a brief hop to Mars, the outer planets and new galaxies.
Space is back in fashion
But almost 50 years later, we still haven’t been back to the Moon. It turns out that space is actually quite a difficult and expensive place to get to. Just 566 people have gone into space (defined – fairly arbitrarily – as 100km above the surface of the planet) since Yuri Gagarin’s pioneering trip aboard Vostok 1 in April 1961. And a mere 24 – all US astronauts on the Apollo programme – have left low-Earth orbit. Only 12 have walked on the Moon.
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Now, however, space is coming back into fashion. The International Space Station (ISS), satellite clusters, space tourism and the colonisation of Mars have all become recurrent themes in the financial media in the past few years. There are plans to go back to the Moon, and even further. US president Donald Trump wants US boots back trampling Moon dust by 2024.
To that end, America’s National Aeronautics and Space Administration (Nasa) is developing a lunar lander to return to the Moon “for scientific discovery, economic benefits, and inspiration for a new generation”. The children of the 1970s may soon finally be getting their Moon base. Nasa has promised a lunar “habitat”, new rovers “and much more to get ready for human exploration of Mars”.
A new commercial dawn
From an economic point of view, the space industry is almost unrecognisable now compared with the 1960s and 1970s. Now, instead of Nasa designing the hardware and farming out construction to favoured military contractors, it outlines its goals and leaves the business of design and construction to the private sector. Space is now a properly competitive business.
And it’s a rapidly growing one. The current size of the space economy is around $340bn, according to UBS. Other estimates put it at nearer $400bn. Estimates of its potential size vary, too. By 2040, Bank of America predicts that will have grown to around $2.7trn; Morgan Stanley’s more conservative estimates, however, have it at just $1trn, though it applies a significant margin of error and says that it could actually be anywhere between $600bn and $1.75trn. The industry’s potential stretches far beyond the aerospace and defence sector. IT hardware, tourism are even mining are areas that could cash in on the new wave of space exploration.
The next lunar landing
In the aerospace sector, the key development has been preparation for America’s “Artemis” 2024 Moon missions. Nasa has named three companies to develop its human landing system – rocket capsules and associated equipment allowing people to arrive on the Moon. To the surprise of many observers, Boeing was not one of the favoured three.
Those selected are Blue Origin, a company owned by Amazon founder Jeff Bezos, which is developing a so-called integrated lander vehicle; and Dynetics, a subsidiary of Leidos, a US defence and engineering company, which is developing the Dynetics Human Landing System. Finally, there is SpaceX, perhaps the most high-profile of the three and the brainchild of Tesla founder Elon Musk. It is developing a “Starship” spacecraft that will be blasted into space on the company’s own “Super Heavy Rocket”. Musk also wants to use the Starship craft for missions to Mars.
Blue Origin is also developing its own rockets – the New Glenn Rocket System – and will also use the Vulcan launch system designed and built by the United Launch Alliance, a joint venture between Boeing and Lockheed Martin. Dynetics will use the Vulcan launch system, too.
The initial value of the contracts is just $967m, with Blue Origin receiving $579m, SpaceX $135m and Dynetics $253m. The money will cover the “base period” until February 2021 when Nasa will evaluate the initial proposals and then select which will go on to develop their systems further.
Things are proceeding apace. Just a few weeks ago, two more unfamiliar names – Robert Behnken and Douglas Hurley – could well have ushered in a new era in human space flight. They were the astronauts carried to the International Space Station (ISS) by SpaceX’s Crew Dragon capsule. This is the first time a private-sector rocket has taken people there.
Heading on to Mars
Mars is also back in the spotlight. The US, Russian and European space agencies all have plans to explore the red planet. Later this month, reports the BBC, Nasa will launch a new rover to the surface of Mars. Called Perseverance, it will scour the planet for signs of microbial life, collect rock samples and examine the feasibility of producing oxygen from atmospheric CO2, something that could be used for future manned missions to Mars.
Private enterprise, too, has visions of setting foot there. Musk’s SpaceX and Bezos’s Blue Origin both have human colonisation of Mars as a goal. Never one to miss a chance to blow his own trumpet, Musk has said that SpaceX will land the first cargo there by 2022 and the first humans by 2024 – provided he “gets lucky and things go according to plan”. It’s a deadline that will certainly be missed, but the ambition is striking.
Four minutes of weightlessness
Space isn’t just about scientific research and designing sophisticated equipment. People also want to go there for fun. Space tourism is a very niche area, but it’s more advanced than you might imagine. The first space tourist was Dennis Tito, who put American space noses out of joint when, in 2001, he paid the Russian Space Agency a reported $20m to spend almost eight days orbiting the Earth, travelling on the Soyuz TM-32 mission to the ISS. Six more millionaires followed Tito, but none have gone since 2009.
However, around 700 of the very rich have booked places on proposed low-orbit space flights being developed by Richard Branson’s Virgin Galactic. Each flight will take six passengers – who will have forked out between $200,000 and $250,000 each – on its hop into space, with the millionaires enjoying just four minutes of weightlessness for their money. Not much time, sure, but the views will be out of this world.
There is no word so far on when these trips will happen, however. Virgin said in July last year that it would be “starting commercial operations within a year from now”, but, like nuclear fusion or cheap, mass produced graphene, actual operations are always just around the corner. Still, Branson has managed to persuade around 8,000 people to register their interest. Those who are serious will be “invited” to pay a $1,000 deposit, which will push them to the front of the queue when the company releases its next tranche of seats for sale. Blue Origin is also developing sub-orbital (flying lower and not orbiting the planet) space tourism with its New Shepherd system, which will carry six people. No tickets have yet been sold, however.
And we could also be heading into space as part of terrestrial travel. Low-orbit flights in “spaceplanes” could form the basis of the next wave of high-speed air-travel, replacing conventional flights of ten hours and over. UBS believes high-speed, sub-orbital travel could be a market worth $20bn, dwarfing space tourism’s $3bn market. London to Sydney could be done in under an hour, says Wired – but at a cost of something like $200,000 a ticket. It remains to be seen whether it is a viable proposition or just a flight of fancy.
Then there’s asteroid mining. A one kilometre-diameter asteroid could contain 30 million tonnes of nickel, 1.5 million tonnes of metal cobalt and 7,500 tons of platinum; the platinum alone would have a value of more than $150bn at 2008 prices (the year platinum hit a record peak). But asteroid mining remains an extremely long way off.
Satellites: the key to the space sector
For the most part, though, companies doing business in space aren’t concerned with interplanetary travel or scooping up precious metals from lumps of space rock zooming by at hundreds of thousands of kilometres per hour. The real day-to-day business of space involves satellites. They are used for navigation, communication, observing the Earth and analysing the pictures and data they record; and, of course, for defence and national security.
In recent weeks, humdrum satellite launches have caught the public imagination in a way they haven’t before. As people looked up into the less polluted night skies of locked-down cities, they became intrigued by the processions of bright pinpoints of light traversing the sky. These were not visitations of aliens or a shower of meteors, but SpaceX’s Starlink satellite constellations being launched into low-Earth orbit to provide internet access.
Beefing up broadband
Newspapers even printed launch schedules and advised when and where the satellite launches could be viewed from Earth. Their very brightness upsets many astronomers, however, who are worried about the amount of space junk getting in the way of their telescopes. And there will end up being a lot of them: SpaceX launches 60 of the small satellites at a time and aims to deploy 1,584 by 2022. With the extraordinary ambition of providing internet access to the whole of the globe, it wants eventually to be able to launch up to a staggering 42,000 of them in the next decade, says Forbes. Given that there are currently just shy of 2,700 satellites in orbit, that’s a huge jump.
Satellite orbits vary hugely. Global Positioning System (GPS) satellites, for example, sit in a “medium-Earth orbit” of around 12,500 miles. The GPS we tend to use in our smartphone maps is provided by the US government, created by the US Department of Defence and now operated by the newly formed Space Force, which maintains 31 satellites in orbit. Because it is an American government system, it can deny access to it at any time. Partly because of that, Europe is creating its own GPS system called Galileo, which will operate 30 satellites in an orbit of 23,222km (around 14,400 miles).
The International Space Station (ISS), by comparison, orbits at just 408km (253.5 miles). But Starlink and Amazon’s Project Kuiper will offer satellite broadband internet from a constellation of low-Earth orbit satellites. Starlink’s 1,584 satellites will be at just 550km (342 miles), while Project Kuiper’s will be at 590km (367 miles).
Britain enters the satellite race
And there is one more company that is hoping to provide broadband internet via its own cluster of low-Earth-orbit satellites. OneWeb is a company headquartered in London with operations in the US. It wants to put communications satellites into orbit offering 5G internet connectivity. So far, it has launched 74 satellites, but in May it applied to the US Federal Communications Commission for permission to launch up to 48,000. However, after failing to secure $2bn in funding from SoftBank, its biggest investor, it filed for Chapter 11 bankruptcy in the US.
In a surprise move last month, reports the Financial Times, the UK government said it would put up £500m as part of a consortium to buy the company out. The government, having left the EU’s Galileo system, wants to build its own navigation system alongside OneWeb’s communications capabilities. It will cost around £5bn. But are OneWeb’s satellites suitable? At a height of around 1,200km (746 miles) they orbit much higher than Starlink or Project Kuiper, but much lower than traditional GPS satellites. So could Britain have its own state-owned satellite operator competing with the likes of Elon Musk? And would it be a good idea? It is, according to Peggy Hollinger in the Financial Times, “a high-risk gamble”. Time will tell. In the meantime, we look at some other potential investments in the space economy below.
The stocks to consider now
Many of the eye-catching developments in the space sector come from private companies, notably SpaceX and Blue Origin. On the space tourism front, however, Virgin Galactic (NYSE: SPCE) has also caught the imagination of the media and the public and is available to invest in. It currently has plenty of cash – around $240m – but is burning through it at a rate of around $60m a year and until it starts sending paying customers into space and returning them safely, it will not make many sales.
Another option is to look into the defence giants involved in the space economy. Although Boeing (NYSE: BA) failed to make it through to the final three of Nasa’s lunar lander competition, it is still an important company in the space economy. Its defence, space and security division comprised 34% of sales in 2019. Other big defence companies that are involved in the space business include Lockheed Martin (NYSE: LMT), where the space business makes up around a fifth of revenue, and Northrop Grumman (NYSE: NOC). In Europe, Airbus (Paris: AIR) and Safran (Paris: SAF) jointly own the ArianeGroup rocket maker.
One publicly quoted company that focuses on rocket and missile propulsion systems is Aerojet Rocketdyne (NYSE: AJRD), which made the engines for the Space Shuttle, and more recently motors for Blue Origin’s crew capsule system. It is also working with Nasa to develop a solar-powered engine that it hopes will power the interplanetary spacecraft of the future.
Satellite communications is probably the biggest and most promising sector, with several “pure play” companies to invest in. The sector includes manufacture, launch operations and ground equipment. Expand the definition further and you could include satellite TV and radio services, for example. Some of the bigger players in this sector include broadcasters DISH Network (Nasdaq: DISH) and ViaSat (Nasdaq: VSAT) in the US. EchoStar (Nasdaq: SATS) provides communications and internet services, operating nine of its own satellites.
And, while not a huge part of its business yet, Amazon (Nasdaq: AMZN) is getting into the satellite game in a big way, too, with its Kuiper fleet, although this is still a fledgling division.
Finally, among providers of satellite imagery, Maxar Technologies (NYSE: MAXR) is the standout leader. It provides the imagery used in Google Maps and Google Earth.
Ben studied modern languages at London University's Queen Mary College. After dabbling unhappily in local government finance for a while, he went to work for The Scotsman newspaper in Edinburgh. The launch of the paper's website, scotsman.com, in the early years of the dotcom craze, saw Ben move online to manage the Business and Motors channels before becoming deputy editor with responsibility for all aspects of online production for The Scotsman, Scotland on Sunday and the Edinburgh Evening News websites, along with the papers' Edinburgh Festivals website.
Ben joined MoneyWeek as website editor in 2008, just as the Great Financial Crisis was brewing. He has written extensively for the website and magazine, with a particular emphasis on alternative finance and fintech, including blockchain and bitcoin. As an early adopter of bitcoin, Ben bought when the price was under $200, but went on to spend it all on foolish fripperies.
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