TAMPA, Fla. — While the space economy is expanding across multiple fronts, questions remain about how some of its most promising opportunities could translate growing demand into sustainable profits.
Remote sensing is one of the most commercially mature parts of the industry, with applications ranging from wildfire monitoring to tracking chemical signatures on Earth.
“All of these things have value, but how do you derive the value and have a cost effective data acquisition for the commercial marketplace?,” said Lisa Rich, founder and chief operating officer of hyperspectral imagery company Xplore, at the Satellite Conference in Washington, D.C. March 25.
“I think that’s the challenge, and the nut that hasn’t necessarily been cracked, because we don’t see that ‘internet moment’ that you expected to see with the data being this gold mine just yet,” she said.
Rich pointed to earnings reports from public early movers such as Planet that show improving backlog and revenue, underscoring growing demand in the sector.
“What we’ve seen mostly is that the demand is there and the profits remain somewhat elusive,” she added.
Advances in artificial intelligence could help address some of these challenges, according to Rich, by improving how efficiently data is processed and delivered from satellites.
On the horizon
The emerging commercial market for connecting smartphones and other mass-market devices directly from space is often touted as one of the biggest near-term growth opportunities.
Matt Desch, CEO of satellite operator Iridium, which is developing narrowband direct-to-device services, recalled how an investment banker recently suggested the market could be worth as much as $1 trillion.
However, he cautioned that many questions remain around pricing and applications for the broader sector, including whether varying direct-to-device business models will ultimately prove sustainable.
It could also take until the early 2030s for the market to mature and “really move the needle,” Desch added, as companies work through technical and economic challenges.
Jim Bridenstine, a former NASA administrator who now advises private equity firm Acorn Growth Companies, also pointed to sizable long-term growth opportunities in microgravity and the Moon.
“Microgravity is not right now recognized as the massive opportunity that it will be 10 or 15 years,” Bridenstine said, with potential applications ranging from advanced manufacturing to biomedical production.
Meanwhile, developing a budding lunar economy hinges on efforts already underway to build a cost-effective lander.
Overcoming challenges
Despite the optimism, panelists pointed to several bottlenecks that could limit the industry’s ability to capitalize on growing demand, including supply chain constraints and the availability of key components such as chips.
It is also unclear whether countries such as the United States have enough space manufacturing capacity to meet rising demand, amid growing economic nationalism and pressure to localize supply chains.
“We don’t really know,” said Akhil Rao, managing partner and chief economist at strategy advisory firm Rational Futures.
“And I think this should be a very shocking and perhaps a ‘call to action’ sort of thing for us here in this room. The best estimates we have suggest the answer is no.”
Panelists also emphasized the need for strong competition as SpaceX’s growing dominance risks limiting broader innovation.
The SpaceX growth driver
Still, reports suggest SpaceX could file a prospectus for its highly anticipated IPO as early as the end of this week, potentially unleashing the largest liquidity event in the industry’s history.
Tess Hatch, managing director at Stifel Venture Bank, noted how the IPO would join only two other major liquidity events for venture-backed space companies.
The first came in 2014 with Google’s landmark $500 million acquisition of Skybox Imaging, widely seen as catalyzing venture investment in the sector by showing that space startups could deliver meaningful exits. Skybox was later renamed Terra Bella and sold to Planet.
The second wave came through mergers with special purpose acquisition companies (SPACs) around six years later, which provided a path to public markets for a range of space companies, though many have since struggled to meet investor expectations.
A SpaceX IPO would generate significant returns for early investors and employees, Hatch continued, potentially recycling capital and talent into a new generation of space ventures.
“I’m pretty excited about that $1.75 trillion,” she said, referring to a target valuation representing roughly 1.75% of the global economy.
For Desch, the industry’s focus on valuations risks obscuring a more fundamental issue.
“Valuation is not profit,” he said, cautioning that valuations alone do not necessarily indicate sustainable growth for the broader industry.
<em>SpaceNews correspondent Debra Werner contributed to this article from Washington, D.C.