space market, rocket, rocket launch, space, new space, outer space, NASA, SpaceX, ARKindu, ARK, Industrial Innovation, ARK investment management, investing, ETFs, arkq

Rockets on the Rise: New Space Market Brings Explosive Opportunities

Update: ARK published this article about new space market back in October 2014 after the Antares rocket explosion. In the last three months of 2015 several exciting events in the space industry have increased ARK’s conviction in the commercialization of space. First, Congress passed the Commercial Space Launch Competitiveness Act, which protects private spaceflight from regulatory oversight for up to eight years. The bill also allows companies to harvest materials from space, which opens the door for space mining. Second, Congress has funded NASA’s commercial crew program fully for the first time since 2011, and NASA already has awarded Boeing and SpaceX commercial crew contracts. Third, both Blue Origin and SpaceX have landed rockets successfully, marking the first step toward reusable rockets and a steep cost decline in the cost of launches. The space industry finally is ready to rebound after a few major failures in the past couple of years.

Sometimes rockets do explode. On Tuesday October 28th of 2014, an unmanned Orbital Sciences ORB Antares rocket exploded shortly after launch. The rocket was to carry supplies to the International Space Station. A problem with its decades-old Soviet engines purportedly cased the explosion.1 SpaceX also provides supplies to the International Space Station, and similarly suffered a recent rocket explosion, caused by a faulty strut.2

Historically, governments have dominated the rocket launch business. Launching a rocket is expensive, dangerous, and until recently not profitable. However, as companies put more satellites into orbit, declining costs have made satellite launches a potentially lucrative business.

Historically, governments have contracted out to companies to build rockets and deliver objects into space. Yet, in the last decade private companies have started launching payloads for other corporate entities. This shift towards the commercialization of space has mitigated the government cutback related decline in rocket launches, as shown below. Thus far this decade, the total number of launches has flattened out but, thanks to funding from both satellite and government programs, the number conducted by for-profit companies is likely to exceed previous records in the coming decade.

space market, rocket launch, space, new space, outer space, NASA, SpaceX, ARKindu, ARK, Industrial Innovation, ARK investment management, investing, ETFs, arkqSource: Space Launch Report, ARK Investment Management LLC

The shift toward corporate launches has been accelerated also by NASA’s abandonment of the Shuttle program. NASA recently awarded both Boeing and SpaceX commercial crew contracts. While governments have always launched more rockets than corporations historically, this decade may be the first in which the space market could be dominated by corporations launching more rockets, especially now that SpaceX has landed the Falcon 9 rocket successfully after deploying 11 satellites. Reusable rockets should cut SpaceX’s launch costs by orders of magnitudes3 from its already industry leading low $61.2 million launch cost for 30,000 pounds into Lower Earth Orbit (LEO).

space market, rocket launch, space, new space, outer space, NASA, SpaceX, ARKindu, ARK, Industrial Innovation, ARK investment management, investing, ETFs, arkqSource: Space Launch Report, ARK Investment Management LLC

In addition to SpaceX, several competitors are emerging in the growing new space market. The United Launch Alliance (comprised of Boeing BA and Lockheed Martin LMT), Sierra Nevada Corporation, Orbital ATK, Aerojet Rocketdyne, Blue Origin, and Virgin Galactic all are competing to make a name for themselves in the next generation space race.

  1. http://www.extremetech.com/extreme/193129-antares-rocket-explodes-during-launch
  2.  http://www.nbcnews.com/science/space/cause-spacex-falcon-9-rocket-explosion-traced-failed-strut-n395346
  3.  http://www.spacex.com/news/2013/03/31/reusability-key-making-human-life-multi-planetary


ARK's statements are not an endorsement of any company or a recommendation to buy, sell or hold any security. For a list of all purchases and sales made by ARK for client accounts during the past year that could be considered by the SEC as recommendations, click here. It should not be assumed that recommendations made in the future will be profitable or will equal the performance of the securities in this list. For full disclosures, click here.