SpaceX became the first private company to launch NASA astronauts to the International Space Station this weekend.
“Human space flight is a big deal,” Chad Anderson, managing partner at Space Capital tells Yahoo Finance. “It is probably one of the most exciting parts of the [space] sector.”
The launch is a huge deal for SpaceX, the private company founded by Elon Musk, contracted by NASA to carry astronauts on the Crew Dragon spacecraft to the International Space Station. The historic liftoff atop a Falcon 9 rocket is a long time coming — with a bit of a storyline of David and Goliath.
“SpaceX 10 years ago was the underdog,” said Anderson, whose Space Angels portfolio includes SpaceX.
“They were fighting tooth and nail to get NASA contracts, to get security contracts, get the defense and community and government agencies to trust them enough to give them contracts.”
Saturday’s mission, called Demo-2, ups the ante on aerospace giant Boeing (BA), which is separately under contract to ferry NASA astronauts via its own capsule. During a test flight last year the CST-100 Starliner failed to dock at the ISS. Boeing will re-test it before carrying humans. It’s worth noting, Boeing’s contract awarded by NASA in 2014 was valued at $4.3 billion versus SpaceX’s $2.5 billion.
“Boeing was paid almost twice as much as SpaceX for essentially the same thing,” said Anderson. “So SpaceX is delivering at half the cost to taxpayers.”
Since NASA retired its own shuttle program in 2011, the U.S. has been paying Russia more than $80 million per seat to shuttle astronauts to the ISS via the Soyuz spacecraft.
“Reducing the cost is basically key here,” said Anderson. “To reduce the burden on taxpayer dollars and on congressional budgets and free up NASA's budget to go out and do other interesting science exploration missions.”
Demo-2 brings SpaceX one step closer to achieving its more ambitious goals of going to the moon, and later Mars.
Investor appetite
But perhaps the biggest tailwind from the expected liftoff is investor appetite for space endeavors, even during this economic downturn.
Virgin Galactic’s (SPCE) public debut last year is proof of a market willing to bet on companies with lofty space plans but with no profitability yet.
“Virgin is for the most part, pre-revenue, pre-profits certainly — and so what would happen if a company went onto the public markets, to have good revenue growth, and was profitable,” says Anderson.
Virgin Galactic plans to send people on sub-orbital flight voyages, and eventually, offer high-speed point- to-point travel. The company recently announced a partnership with NASA to work on the technology.
“From an investor's perspective and where we sit we think the human space flight element is really important in terms of public awareness, and getting people excited about what's going on,” said Anderson.
The first launch attempt on Wednesday, May 27th was scrubbed due to weather. Crew Dragon was successfully launched on Saturday May 30th from the Kennedy Space Center and docked on the International Space Station on Sunday.
Ines covers the U.S. stock market from the floor of the New York Exchange. Follow her on Twitter at @ines_ferre
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