Pierre Lionnet
@LionnetPierre
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Space economist (one of the very few) - Research & Managing Director at Eurospace - views are mine not Eurospace
Paris, France
Joined April 2015
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Pinned Tweet
How big is 'the space economy'? Confronted with endless discussions I decided to publish a paper on linkedin to discuss the matter, from an economist perspective. Please read the full paper. The highlights are provided in the thread below. 1/7
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I think that I need to discuss launch costs (again), because I keep reading the same bullshit such as: "Over the past decade, launch costs have been lowered by an order of magnitude, thus laying the foundation for the emergence of a new, expansive space economy." 1/9
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We have modelized the economic equation of
@SpaceX
as a launch service provider (leaving aside Dragon, Starship and Starlink) with a view to uncover its cost and profit drivers. The idea was to use Falcon 9 as a benchmark for testing the economics of launcher Reusability. 1/18
4
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203
I was sifting through
@VirginOrbit
investor deck (because I am a masochist obviously) and I came across the 25B$ market projection for "Small-Satellite launch" by 2030. The reference source is "Prophesy Market Insights". So I looked it up on Google. 1/
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16
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What's going on at
@RocketLab
? Apart from a seemingly toxic work environment, two recently published financial reports give us a hint of
@RocketLab
economics and how it is losing money consistently on every launch, despite NZ government financial support. A thread. 1/14
5
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138
@MorganStanley
recently issued a report that puts the value of
#SpaceX
at $100B. Let me start by saying that
@MorganStanley
disclaims that it may have "conflicts of interests" affecting its "objectivity". It is my opinion that it also affects
@MorganStanley
's common sense.
1/
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I thought I was the only using the burger analogy to explain space economics (), well no: this report finds that a spaceport has an economic impact comparable to a couple of fast food restaurants. 1/
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“Northrop was uncertain that the commercial market existed beyond guaranteed contracts to house NASA astronauts, and this is likely what led to its decision to drop a bid.”
I share this view. 1/
Northrop is almost certainly out as one of four potential providers of commercial space station services for NASA.
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And now we can put in perspective the impact of privately funded spacecraft vs institutional programmes, and here again the current impact of Starlink on launched mass statistics is absolutely unique.
#eurospacefacts
5/
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Today:
@AschbacherJosef
"without NASA SpaceX would not exist (...) this is a lesson for Europe and ESA"
#BBESpaceForum
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Starlink: 2000 satellites launched (and >10% already decommissioned). Why isn't
#SpaceX
accelerating the deployment? What is preventing it? Why is it not happening? I would have expected a higher frequency Starlink launch rate at this point (40-50 launches/year at least). 1/
1469 Starlink satellites active
272 moving to operational orbits
Laser links activate soon
11K
10K
132K
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21
85
So is this cheap? Well yes, it is getting cheaper. But has it changed the volume of demand? Not yet (except SpaceX's own demand to launch Starlink - see 2020/21). And this is the big issue of launch demand, it is not very elastic and reacts poorly to price variations. 8/9
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In average the real cost to launch to GEO has dropped by 30% in 3 decades, and the real price to launch to LEO has dropped by 50% in 3 decades. Of course a lot of this due to the roll-out of Falcon 9 and its aggressive pricing policy. 6/9
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As shown in this FAA forecast, in 2015 nobody saw Starlink coming. Fun fact: the FAA didn't see Oneweb coming either, although it was announced in 2012. Forecasts are like astrology to me: a matter of irrational belief.
1/2
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It seems that everybody's reacting to the same information source, namely CNN's paper reporting on SpaceX's letter to the Pentagon asking for financial support to keep the Starlink service alive in Ukraine. But the figures dont make sense to me.
1/
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So how low must launch prices go to actually really make a difference in launch demand? 9/9
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Like every year, with
@space_angelC
we are updating the Eurospace
#spaceeconomy
data set with the compilation of 2021 launch events. I will post a few charts making this thread grow as I get them ready. So let's get started. 1/n
#eurospacefacts
7
12
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Want real space economy data prepared by real economists?
@BEA_News
measures the US "space economy" with its usual accurate and transparent approach and complete methodological notes. Bottom line? CAGR 2012-2019 was 1.7%.
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“all post-SPAC space firms look to be coming in short of the 2023 predictions they made in 2021” not to mention the usually delirious longer term projections. 1/
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9
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Interested in some
@RocketLab
#Electron
launch data?
I've been compiling the last 3,5 available years of data from the 10-Q and 10-K reports, and have found a few intersting facts.
TL/DR:
- average unit price >6,1M$
- average mass launched: <90kg
- average price/kg: <70k$
1/
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What's the current status of space SPACs? well, not very good. I must say that I am not surprised. A little thread. 1/
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This is already impressive, but is nowhere close to a factor 10 decrease. Even when considering SpaceX most aggressive pricing strategies (i.e. not for NASA, NRO and DoD), the best price/kg to LEO I could measure with Falcon 9 was 4k$/kg - but in average F9 fares at >10k$/kg 7/9
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Hello space twitter. Just because I happen to have rendered this in a pivot today I share with you the full chronology of SpaceX Falcon launches with the total launched mass for each launch. Notice the high variability of the mass launched. 1/
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I had a look at the latest
@McKinsey
pro-space op-ed, and couldn't help but notice this abomination. A chart comparing R&D expenditures between new (and old) space companies and US government.
1/
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Furthermore, all small launch players are targeting a reduction of their launch prices (small launchers are among the most expensive in the market today >>20k$/kg). If lower prices become the market baseline all potential for revenue growth will be wiped out. 15/
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This assertion from "an integrated strategic and financial services boutique" is wrong because "launch costs" have not been lowered by "an order of magnitude" - furthermore, as all economists know, the price elasticity of launch demand remains an elusive subject. 2/9
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After having been served the message that small satellites could do as well as larger ones (the “smallsat revolution”) here we are: back at square one.
Earth observation evolution: Bigger satellites promise bigger payoff for imagery operators
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#Starlink
Gen2 is 5x bigger and 10x more capable than Gen1, i.e. 2x more efficient (not considering potential lifetime extension). Curious to see if service price drops accordingly, to enable more market penetration. But let's have a look at some launch numbers now. 1/
The 1st
#SpaceX
#Starlink
Gen 2
#satellite
has been produced. It's 7 meters long & 1.2 tons,
@elonmusk
says. Note: that's 4-5X more massive than Gen 1!
Musk adds, the new version will be almost an order of magnitude more capable than Starlink 1 in terms of useful data throughput.
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So what is launch cost? In its simplest form it is the unit price of a launcher. Once eliminating the Space Shuttle from the series, the trend looks like this. We can see that in average the launcher unit prices have decreased by a factor 2 to 3 in 30 years. 3/9
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The clock starts ticking for
@Astra
, whose trading value has dropped below 1$ since August 25th. If the stock trades durably (30 days) below 1$ it will be delisted. The stock has lost >90% of its IPO value in 18 months... 1/
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Today we release our annual facts & figures report. The press presentation is available for download. Get it here:
And scroll down for highlights.
1/
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After seeing so many "artistic" space market forecasts lying around, and considering that this art form seems not so difficult, I decided to try my hand at it with a forecast on constellations markets. Here is my step by step tutorial applied to real data. 1/
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”The Texas-based operator said Nov. 14 it now expects to spend a total $115 million on the first five BlueBird satellites, including manufacturing, launch and other costs, to deploy them at a 53-degree inclination in low Earth orbit (LEO).” that’s incredibly cheap 1/
AST SpaceMobile adjusts launch plan for potential direct-to-device customer
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Hello Space Twitter. As 2021 s coming to a close, I am looking back at my tweet history, and thought it would be interesting to share the most significant threads I published in 2021. I have gathered them by themes in this thread of threads. 1/
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52 launches in 2021: China is the space power to watch. US and European institutions, with their commercial and newspace obsessions, are missing the point.
Long March 7A launches classified Shiyan-12 satellites, making it 52 orbital launches for China in 2021
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Let's have a look at institutional activity and notice how China has really stepped up its game. In 2021, the Chinese space programme launched to orbit as much mass as all the other institutional programmes worldwide combined.
#eurospacefacts
7/
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Is it because the estimates of these consultancies, despite being less conservative than mine, are still way below the business case that
@VirginOrbit
management wants to present to potential investors? This is an IPO worthy question.
12/
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I have this bad habit of looking into financial statements of space companies. Today I found it interesting to compare side by side the financial statements of
@RocketLab
USA and its NZ subsidiary.
1/
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I think that prospecting launch revenues in excess of 350M$ as soon as 2024 is unsupported by any figure rooted in today's market reality. The 'proliferation' of small satellites only exists in Powerpoint and/or will not be accessible to
@VirginOrbit
14/
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1
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IMO the reality of
@VirginOrbit
is that it operates in an accessible launch market segment that is currently worth 250M$/year for less than 15t to launch, already crammed with competition (with more to come), and with a potential for CAGR below 5%/year, at best. 13/
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@techandco
@cedrico
Non
@cedric_o
, SpaceX n'a pas divisé par 10 le cout d'accès à l'espace. Venez nous voir à Eurospace, on discutera d'économie du spatial avec des données vérifiables.
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11
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“Having no competition gives (SpaceX) price leverage. SpaceX increased their prices significantly last year, and if tomorrow they do the same thing, no one will be able to push back on that.” says
@ViasatInc
head.
1/
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Who's made money on the
@virgingalactic
debacle? There is
@richardbranson
of course, and now also
@chamath
. My thoughts go to all the stockholders and fanboys that have subsidised the wealth of these two smart players.
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But is the unit price of a launcher a good indicator? Not really, because other factors apply, such as the launched mass, the fill ratio etc. So a better indicator is the actual launch price per kg (i.e. the unit price divided by the actual launched mass for each launch) 4/9
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So we have a new space SPAC breeding. Last year I worked with a master student on a toolbox to analyse the SPAC thesis. Let's see how Intuitive Machines performs on our indicators. 👉This is NOT investment advice.
1/
Intuitive Machines, a premiere space exploration company, plans to go public through a business combination with Inflection Point Acquisition Company $IPAX to accelerate growth in the lunar economy. Read the full press release here for additional details:
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Also, to make it more or less correct, you have to separate LEO launch from launches to GEO and other orbits, due to a very different load factor. And to avoid a few extreme value points in the series I have kept only the main launchers (worth 95% of total mass launched). 5/9
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A friend directed me to this 'article' asking for my opinion.
TL/DR: the usual bullshit purporting the idea that space is a fantastic opportunity for investors, laced with bad data.
(Spoiler alert: it's probably not)
1/
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Even with very optimistic assumptions a seemingly very affordable system such as the Falcon does not guarantee to be profitable without sufficient volumes. The break even for Falcon is between 6 & 8 flights, after that point the profit grows fast. 4/18
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We should not forget how hard long duration spaceflight is on the human body. After more than 60 years of human spaceflight we still lack a viable solution to create gravity in space.
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According to this article the monthly rate for Starlink in Ukraine is 2500$/month. Same source says that 42k terminals are active in Ukraine. This would make >1,2B$/year for SpaceX making it a war profiteer of the purest kind.
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Now I am curious to know why
@VirginOrbit
is using the services of this market research boutique, instead of the usual space market experts such as
@NSR_satcom
,
@euroconsultEC
and
@brycespactech
11/
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This is why I believe that estimating this segment at 1,5B$ in 2020 is completely excessive. My current estimate is that in 2020 the total value of satellites <100kg was 407M$ for an average of 116k$/kg. They were launched at a total cost of 142M$, or about 40$/kg in LEO.
10/
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We find that there is a very strong correlation between gross profit and launch cadence in launcher economics, in other words: without a sufficient volume of launch the launcher cannot be profitable, reusable or not. 3/18
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Isn't it interesting to see that the World Economic Forum (
@wef
) has put space on its agenda? But is the
@wef
looking into the space economy in the right way with thehelp of
@BryceSpaceTech
? Let me start a discussion. 1/25
.
@BryceSpaceTech
contributed to a new white paper from the
@wef
Global Future Council. The report addresses six ways space technologies benefit life on Earth.
#Space
#Data
#WEF
0
0
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Today I presented the latest data on the European space manufacturing sector
#eurospacefacts
. The full presentation is available for download.
2
12
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The Eurospace observatory of the
#newspace
now counts more than 1000 active companies in the space and transportation infrastructure domains (no downstream included). Total funds raised: 48B$, total employment: 52k.
1/
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Always an interesting read from
@CatSE___ApeX___
on $ASTS. This one includes a discussion on power, where the assumption is that each ASTS satellite will have 120 kW of power. This is interesting because power system drives both performance and costs. 1/
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Yesterday I was invited by
@esa_EO
to present the key trends in Earth Observation infrastructure at the ESA EO commercialisation event. Highight in this thread, full slide deck available here.
1/
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38
Space market metrics can be misleading if they are not providing sufficient details. Let me discuss this in a little thread using
@ASDEurospace
data sets on satellite (and launch) markets. See the example below and follow this thread for explanations.
1/
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I can never stress enough that one of the key problems of the commercial space industry is the ubiquitous presence of very bad data. Like the quote below. There is no such thing as a demand for 30k satellites/year.
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I know that there will be some (many?) that will disagree and say (e.g.) that the 100B$ value is justified by the potential of Starship, Mars colonisation and whatnot. It may well be, but this is not the rationale of the analysis proposed by
@MorganStanley
.
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Who really benefits from a
#SPAC
? Read here an excellent paper on SPACs performance (updated to Nov 2021), analysed from the POV of the Sponsor, of the SPAC shareholder and of the target company. 1/
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So let's assume that it is indeed a typo (if so, it is repeated twice, in two similarly important documents), and let's correct it to "Prophecy Market Insights". This name actually yields a positive result. 3/
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0
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This real time visualisation of all satellites (and objects) in orbit(s) by
@PrivateerSpace
is pretty amazing (). See here the Geostationary orbit situation, active satellites are in Orange, the rest is junk.
2
10
36
Adam Spice Rocket LAB CFO says ”services in space is a $320 billion TAM.” this is wrong, the quoted figure is mostly composed of terminal equipment, multimedia content sold over satellite and valorisation of GNSS apps. The value of space services for operators is a TAM of 18-20B.
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When I first saw the reference in the SEC filing for the merger I thought it was a typo. But when I see it spelt the same way in the investor deck I don't know what to think. Because the term "prophesy market insights" only yields 3 results on Google. 2/
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1
33
To conclude, my impression is that the 100B$ valuation of
#SpaceX
by
@MorganStanley
is nothing but a (very crude) marketing effort that fails to meet any standard of objectivity or realism (esp. considering that in July 2020
@Morganstanley
valued SpaceX at 50B$).
13/
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33
According to this report, the market for satellites <100kg in 2020 was worth 1,5B$. I am speechless. For the record, in 2020 there were 220 satellites launched in that mass range, for a total of 3,5 tons. Accordingly, this would set the average value of each satellite at 7M$. 6/
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1
32
I am working at putting together data on the space SPACs, so I suffer every day looking at badly charted data and rococo projections. Today I was on
@Momentusspace
$MNTS and in particular on this page with future market data. Like I did with
@VirginOrbit
, I googled the source 1/
1
5
35
With this order
@TerranOrbital
will provide each satellite at unit price of 8M$. At 500kg per satellite the value per kg is 16k$, which is a very ambitious target for a complex design, including OISLs, intensive on-board processing and Ka-band phased arrays. Will they make it?
On your mark:
@TerranOrbital
must build 300 broadband sats, each 500kg, for
@rivadaspace
in time for all to launch within 43 months -- assuming
@ITUradiocomms
OK. Launchers not yet announced.
@EximBankUS
.
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For no other reason but my having opened Excel to benchmark launch data from a (very bad) report, I am happy to share the full historic perspective of global launch events since 1957. The USSR still holds the World historic record for annual launch events, but for how long?
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Pure players in space business 5 year stock performance, a video.
1/3
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A rare case where an investment bank has understood the fundamentals of space infrastrcuture business? Will this last?
3
1
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This company sells market reports on everything. With the search tool I could find what seems to be the source for market intelligence of
@VirginOrbit
, with the 7,8B$ small satellite launch market in 2019. I've tweeted about it.
4/
@VirginOrbit
#SPAC
filings reveal the most insane market assessment ever. IDK who these 'Prophesy' guys are, but in 2019 the total launch market was 8B$ in value. The launch market for satellites <500kg (up to 'Mini') was <1B$/year in the past 5 years. 1/
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Deutsche Telekom is charging 4.99 euros ($5.50) per month for up to 30 messages (180 Characters max) using the satellite service. Let's see how much Starlink will charge. But I hardly see this ever becoming a massive revenue source.
9
9
32
So here are my key takeaways on constellations. To put it very briefly I believe that mega-constellations do not represent a major growth market opportunity for the space infrastructure market, due to the high pressure they put on costs to be economically sustainable.
28/
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4
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With
@NedhirSahli
we are finalising our space activity database with 2023 data sets. As I go through various verifications I am pleased to share some graphical outcomes in a short, hopefully informative, thread. All charts are (c) by Eurospace.
1/
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7
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@Kemp
the $ASTR CEO spoke with
@DeutscheBank
in August 2021. Let me have a look at this: the video is available after registration. We see
@kemp
with some nameless guy from DB that I suspect is the author of the July 27th recommendation to buy
@Astra
. A thread 0/
5
5
32
@Astra
stock is now in the equivalent of a free fall. There must be quite a few stockholders regretting they didn't sell above 12$... but what about the hefty number of buyers between 10$ and 16$? How are these people feeling today if they are still holding the stock? 1/
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Now let's dig some more, and see what may qualify this company as the preferred market intelligence source of
@VirginOrbit
. There is also a more recent report on "Global Nanosatellite and Microsatellite trends". What does it say? 5/
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We see that the average mass of satellites is decreasing a lot in recent years, with the average satellite weighing less than 400 kg in 2021, against 2,7t in 2012. This trend is very much driven by Starlink (avg w/o Starlink: 600kg), but not exclusively.
#eurospacefacts
6/
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Moreover, 30% of the 220 nano/microsats of 2020 were launched for commercial constellations (notably Spire and Planet), and their value is more or less known (200-400k$/each or 40-80k$/kg). Similarly 13 were deployed for Satellogic, at a unit value <1M$.
8/
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At that price point each nano/microsatellite would cost >400k$/kg, i.e. the price of the most expensive space programmes in the World such as SBIRS, Helios, Keyhole or Falconeye. 7/
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As expected, after
@MorganStanley
released its 'artistic' valuation of SpaceX in October, we learn that
@SpaceX
raised a few more hundred millions in cash. 1/
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31
And BTW: I don't think that Mars (or Moon) colonies will create that kind of massive demand around 2024-2025... and not even by 2030 (admittedly, this is not a popular opinion). 25/end
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What about some constellation economics for a change? I've been playing around with the data made available by
@erikkulu
on constellations and completed it with my own information on top. So let's have a look at the current status of commercial constellations.
1/
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Need an example of why I say the 'space economy' figure is useless? This Bloomberg feature states "The space economy reached $546 billion in 2022 (...) is projected to climb 41% over the next 5 years. Many established manufacturers have welcomed the new sales opportunities."
1/
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The most expensive satellites in this group of 220 were probably the few larger ones launched for NRO, DARPA, NASA and Blacksky, whose values may go as high as 50M$ each (or 100 to 300k$/kg). 9/
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We saw this coming from day 1.
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This is putting the real cost per kg in orbit of
@RocketLab
at almost 100 kUSD/kg in 2020, i.e. 5 times more than Vega & 20 times more than Falcon 9. This is absolutely not driving down the cost of access to space. 6/14
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Sharing an interesting paper on SpaceX launch pricing (and cost) scenarios, and their impact on the industry at large - even if, differently than
@IanVorbach
, I don't think that Falcon9 produces high margins on each launch.
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People are scratching their heads at
#Starlink
economics. Obviously the various statements of
@elonmusk
on the matter don’t make any sense at all.
Frankly, I'm more concerned about what this says about the internal costs of Starlink than about SX deciding to stop providing free military aid.
I for one am okay with my tax dollars going to this surprisingly expensive internet service for Ukraine.
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Hey
@John__Holst
your piece on Arianespace raises a few interesting points. But there are some that are a bit biased I think. Allow me to discuss them.
1/
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Peter Beck often comes out as a sensible person in interviews. In this one he tears down the small launch business model in a few simple words.
1
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The full research paper is available at linkedin, please read it to understand the assumptions and limitations. The key findings and highlights are posted in this thread. 2/18
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I usually refrain to advertise myself, but if you want a 5mn video review of the LEO mega-constellation 'real' economic potential by yours truly, you can watch it here. Thanks to
@ForumEurope
for the impeccable organisation.
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