NASA plans to pay Elon Musk nearly $850 million to scrap its old space station. Other companies will pay him even more money to replace it.
For nearly a decade, Russia has threatened to abandon the International Space Station and take the space station modules with it, depriving the ISS of its ability to maneuver in orbit and compromising life support. Years of negotiations managed to convince the Russians to stay longer than planned. However, in 2030, NASA says the life of the International Space Station will finally come to an end.
And then Elon Musk will kill him.
Image source: Getty Images.
Conclusion of a strike contract at the ISS
That’s the result of a NASA contract awarded late last month in which the space agency promised to pay Elon Musk’s SpaceX space company $843 million to build a “US Deorbit Vehicle” to perform the “safe and responsible deorbit of The International Space Station in a controlled manner after the end of its operational life in 2030.”
It’s not 100% clear that the “US” designation on the deorbit vehicle means that SpaceX will only deorbit the US sections of the ISS. Four other space agencies — notably the Canadian Space Agency, the European Space Agency, the Japan Aerospace Exploration Agency and Russia’s state space corporation Roscosmos — may have other plans for their respective modules and equipment aboard the ISS. In particular, Roscosmos has never definitively abandoned plans to separate its own modules, for example, to form the basis of a new, all-Russian station.
But NASA assumes responsibility for at least the American content of the ISS and will take over and operate SpaceX’s deorbital vehicle once it is delivered. As the agency explains, it intends to use the vehicle to “pull” or push the ISS into a degenerating orbit, where it will burn up in the atmosphere and the deorbit vehicle will burn up with it.
The space agency asked for competitive bids in several rounds of solicitations last year. NASA did not disclose who other than SpaceX may have bid for the contract, saying only that SpaceX won.
The space station is dead. Long live the space stations!
And it’s not the only space station job SpaceX has won. As you’ve probably heard by now, a total of four separate teams of US-based companies are currently developing plans to build new space stations to allow research to continue in low Earth orbit after the ISS no longer exists. What you may not know is that SpaceX plays a role in at least two of the four (with a third quite likely).
One of the teams, “Starlab”, including companies both public (Northrop Grumman and Airbus (EASY 1.20%)) and private (Voyager Space), announced earlier this year that it had hired SpaceX to put it up whole a space station in single-motion orbit. SpaceX’s new Starship megarocket is scheduled to launch in 2028.
Two other companies, Vast Space and Axiom Space, offering two separate alternative space stations, hope to beat the Starlab team into orbit with launches in 2025 and 2026, respectively. Vast announced it will use SpaceX’s Falcon 9 rocket to launch its Haven-1 module into orbit next year. Axiom has not made a similar launch announcement, but has a long relationship with SpaceX, using the latter’s Falcon 9 to transport teams of astronauts to practice space work aboard the ISS. It’s logical to assume that when launch time comes, Axiom will ride with SpaceX as well.
What space investors need to know
In short, SpaceX is going to make a lot of money operating the space station over the next few years, and it’s going to do it both up and coming — destroying the old ISS and helping put new ISS replacements into orbit. Unfortunately, SpaceX is not currently a publicly traded company and has no plans for an IPO anytime soon, making it difficult for investors to share in those gains. But by making it easier for other contractors to help put space stations into orbit, SpaceX makes those other companies potentially more valuable.
Which of these publicly traded companies looks the most attractive as an investment? Although the estimate is not accurate captivating however, my hunch is that Airbus (one of the Starlab partners) offers the most value right now. Priced at just over 26 times earnings, it’s cheaper than Northrop, Starlab’s other big-name partner – and unlike Northrop, it has no net debt on its balance sheet.
If Boeing was the biggest aerospace name involved in building the original International Space Station, its arch-rival Airbus now appears to be the biggest and best-valued publicly traded sponsor of the ISS replacement.
Rich Smith has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
