Pioneer cover

From the press release: From the moment he is handed a possibility of making the first alien contact, Saunders Maxwell decides he will do it, even if doing so takes him through hell and back.

 
Unfortunately, that is exactly where that journey takes him.

 
The vision that Zimmerman paints of vibrant human colonies on the Moon, Mars, the asteroids, and beyond, indomitably fighting the harsh lifeless environment of space to build new societies, captures perfectly the emerging space race we see today.

 
He also captures in Pioneer the heart of the human spirit, willing to push forward no matter the odds, no matter the cost. It is that spirit that will make the exploration of the heavens possible, forever, into the never-ending future.

 
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Wall Street financial firm condemns Astra as bad investment

Capitalism in space: In a blunt critique announcing its decision to short sell Astra stocks, the Wall Street financial firm Kerrisdale Capital condemned the startup rocket company as a poor investment.

Kerrisdale’s analysis focuses on two issues, Astra’s under-powered rocket and the company’s prediction that it will launch as many as 300 rockets a year by 2025.

Astra’s rocket launch projections are nonsense. No market analysis supports Astra’s planned 300+ launches by 2025. Excluding satellites from SpaceX and China from industry-wide forecasts, there is insufficient demand to support even a fraction of Astra’s aggressive forecast.

Large launch vehicles are a more efficient and cost-effective solution to deploying whole orbital planes versus piecemealing coverage through a series of small launches and will dominate the market for mega-constellations (which are widely expected to comprise the bulk of all satellites deployed over the next decade). Only scraps will remain for Astra and all the other smaller launchers—far less than Astra needs to turn a profit.

Astra is falling behind its competitors. Multiple industry executives we interviewed, who routinely secure launch services for small satellite manufacturers on a global basis, agree that Astra’s rocket dimensions and payload capacity are well below the “sweet spot” of customer needs.

The publication of this report caused an immediate 10% drop in Astra’s stock, though it then recovered somewhat.

The report has some validity, though it assumes that the market for rocket launches will remain the same as it has for decades, an assumption that is simply false. Things always change. What happened before is no guarantee it will happen that way in the future.

Moreover Astra’s strategy is to built a small rocket that is very very cheap. It hopes that low price will bring it cubesat customers who want a launch on schedule and sent to their chosen orbit, something they do not get when they are secondary payloads on larger rockets. There is a strong possibility that this strategy will work, based on the fast growth in the satellite industry in the past decade when SpaceX and Rocket Lab forced launch costs to drop from $100 to $500 million to $6 to $60 million.

Kerrisdale’s report however is a valid wake-up call, and suggests that Wall Street’s recent passion to pour money into many new startup rocket companies (estimated by some to exceed a hundred) might finally be easing.

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11 comments

  • Questioner

    I agree with the analysis. It is very nice to read an elaboration from someone who has decided to pay attention to reality. That’s a rarity today. Mr. Z .: Is there a similar analysis to RocketLab?

  • Joe

    Short selling is one of those “let’s make money off another’s misfortune” ideas that bother me. It is now in their interest to see the stock tank so they can make money. How does that add to either the economy or the good will of a company? It is just a leech sucking the life out of the financial sector.

  • Jeff Wright

    Advocates who pushed for larger rockets have at last been vindicated.

  • Large-launcher advocates have support, but not vindication, from this.

    The next-to-last paragraph of Bob’s post makes a good case for the market for small launchers.

  • Questioner

    Jeff Wright:

    Rocketlab’s Mr. Beck has abandoned his original business plan (one launch of his “Electron” rocket per week) and is now leading the development of the medium-sized and largely reusable “Neutron” rocket. I give RocketLab a good chance because of Mr. Beck’s skills. However, the economic success of this company is also not certain. Would you buy their stocks?

    Comment: Astra has actually already recognized the problem with its small rocket and wants to completely revise it (also use an engine design from Firefly) in order to be able to transport a payload of 500 kg.

  • LocalFluff

    I don’t know anything about Astra’s projections, which is what is part of what being criticized. But in general I’d be a long-term contrarian to anything that is published by who-knows-whom in a newspaper or online. Anyone who has bought Astra stocks and now sells it because having read someone saying something about it online, doesn’t know what he/she is doing.

    Of course there’s a very bright future for small satellites! 300 launches a year is quite doable. When prices go down, demand will come. What did IBM say in the 1970s about the total potential demand for computers? Didn’t Bill Gates say that there will never be any need for more than 650 kilo bytes RAM? Wasn’t GPS developed for military use only, without any imagination of how there could be another market for it?
    “- iPhone will never sell anything, because it is smaller than a wall mounted phone box!”
    Yeah. Because computers, sensors and batteries and everything is growing in size all the time. Or not so much.

    And I’m saying this having advocated small satellites being launched together with large payloads on large rockets. But there is of course a huge and fast growing market for small launchers too. They are so much easier to handle and reuse.

  • Jay

    Questioner,
    Actually Kerrisdale Capital likes Rocket Lab in this post . They see a lot of small sat launchers, but Rocket Lab is also looking at larger payloads with the Neutron rocket, and that shows they want a larger share of the market.

    As a side-note, Kerrisdale also shorted their Virgin Galactic holdings and compared it to a roller coaster ride.

  • Questioner

    Jay: Thanks. Very interesting. Another advantage of RocketLab is that the company boss is also chief designer, just like at SpaceX. Beck certainly does not have the entrepreneurial or predatory skills that Elon Musk does. But I would rate Beck’s rocket science skills and knowledge higher than Musk’s.

    It is also interesting that Beck took a different and, for me, more plausible path than Musk when it came to choosing the engine technology. While Musk wants to get the last bit of efficiency and performance out of his engines with a combustion chamber pressure of 300 bars, Beck tries to achieve a high level of reliability with moderate combustion chamber pressure (100 bars?) and a relative simple gas generator cycle.

  • Col Beausabre

    “What did IBM say in the 1970s about the total potential demand for computers?” I worked for IBM after I retired from the Army and it was a well known story. In the early 1940s, IBM’s president, Thomas J Watson, reputedly said: “I think there is a world market for about five computers.”. Tom Watson Jr disagreed and felt the company should plunge into the market after WW2, the success of which led to his father stepping down and Tom Jr succeeding him

  • Willi

    I bought 20 shares of RocketLab and 20 shares of Astra. I’m prepared for either or both purchases to become worthless. But, if they don’t…

  • Mitch S.

    Grab a really big bucket of popcorn and watch the show!
    There is a reason most entrepreneurs came across as crazy/egotistical/stubborn/illogical. It’s because a sensible person couldn’t handle the maddening uncertainties of creating a high investment new tech product in this rapidly changing market.

    I’m particularly interested in Rocket Lab/Neutron vs SpaceX.
    Rocket Lab founded by an engineer with what he felt was a better rocket design (the electric turbopump concept) vs Space X founded by someone with no particular design in mind, just someone who wanted to lower the cost of getting stuff into space so he could eventually get to Mars (with reusability the key concept that developed).
    Now SpaceX figures on building a simpler/cheaper steel rocket and making up for the weight with sophisticated efficient engines.
    Rocket Lab says better to go with simpler, less stressed engines (no more electric turbopump) and make up for the lost thrust with a sophisticated, lightweight CFRP rocket.
    May the best idea/execution win!

    Astra is at the mercy of the future Sat market. So it’s not just developments in rocket tech but developments in electronics/communications, politics (concerns about space debris etc) that will determine demand for small sat launches.

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