In recent years, privately-owned space travel programs such as Elon Musk’s SpaceX, Jeff Bezos’ Blue Origin and Richard Branson’s Virgin Galactic have been the hot topic of discussion. Let’s break down their plans for the future, why they’re private and what would happen if they went public. Here’s what you need to know.
What makes these space programs attractive?
First, what makes these space travel programs so special? SpaceX, Blue Origin, Virgin Galactic and some smaller companies have big ambitions for the future. They want to commercialize space; one day, space travel will be as easy as buying a plane ticket. Virgin Galactic wants to have space tourism readily available by the end of this year. In addition to commercializing space, Elon Musk and Jeff Bezos are in a race to make humankind multi-planetary by sending people to live on Mars. If anything were to happen to Earth – such as nuclear war or global disaster from climate change – we could have Mars as a backup. Sounds like something straight out of a sci-fi movie. How exciting!
Can I invest in these companies?
Now that you know what makes these companies special, the investor in you might be thinking, “Where can I invest in these companies? Is there a stock I can buy?”
The answer is yes and no.
Virgin Galactic is a publicly traded stock that you can find on the New York Stock Exchange (NYSE); the ticker symbol is SPCE. However, companies like SpaceX and Blue Origin aren’t public and don’t plan on going public any time soon.
Why do companies go public?
To understand why SpaceX and Blue Origin stay private, we first need to know why companies go public. Companies go public to raise more capital, expand the company and plan future projects. They do this by offering a piece of the company to “the public,” you and me.
Going public strengthens capital, eases acquisition between companies and diversifies the company’s ownership. But there are also disadvantages: It puts pressure on short-term growth, imposes regulations on trading and management and forces companies to publicly disclose their profits and other projects. The previous owners also lose partial control of the decision-making.
About Virgin Galactic
In Virgin Galactic’s case, they needed more capital to help pay for the high cost of flying people to space. Also, Virgin Galactic’s mission is to give space tours to individuals. This goal is much more attainable and more likely to be profitable in the short term. So, going public makes more sense.
SpaceX and Blue Origin
Companies like SpaceX and Blue Origin have another objective, which is much grander and requires more time. Putting a man on Mars is no easy task. It takes around seven months to travel there. Short-term demands of shareholders would interfere with the long-term ambition. Musk can only afford to blow up his rockets because there is no pressure from investors like you and me to have returns on investments (ROI).
Musk’s Falcon Rockets were blowing up for years before becoming the rocket that even NASA uses today. This long-term mindset gave SpaceX a valuation of over $100 billion from Morgan Stanley in 2020.
Fortunately, SpaceX and Blue Origin have enough investors and business with NASA to avoid going public and sustain their massive undertakings. It also helps that these two companies are run by two of the richest people in the world.
Private ownership is more efficient.
Another main appeal to privately-owned space programs is – you guessed it – that they’re private. The advantage to space programs staying private is these companies avoid bureaucracy, making the process faster, cheaper and more efficient. This was the major reason NASA stopped sending astronauts to the moon in 1970; it simply became too expensive. NASA can’t afford to just blow up rockets like Elon Musk. The government and the military often contract private companies because it would take twice as long and cost twice as much if they did it themselves.