Impact of SpaceX rideshare on small sat launchers market

[M.E.T.]

Did some thinking (always dangerous, I know).

So I thought, how about turning this around. To those (and there are many) who disagree with my view that smallsat launchers have a weak business case, what is your estimated timeframe for each of the following to be profitable from launch services? Let’s pick a few of the most high profile candidates:

Rocketlab
Relativity
Virgin Orbit
Astra
And ok, let’s add Stoke.

And in the simplest terms, try and show your broad assumptions (e.g. rocket development cost, launch facility development cost, per launch cost, per launch price, launch frequency and estimated timeframe).

I would be most interested if anyone gets to a profitability horizon earlier than say 2028 or thereabouts. And that’s under current market conditions. Probably 2030, even.

Note, I haven’t done the calculations. Just going on gut feel at the moment.

[trimeta]

Did some thinking (always dangerous, I know).

So I thought, how about turning this around. To those (and there are many) who disagree with my view that smallsat launchers have a weak business case, what is your estimated timeframe for each of the following to be profitable from launch services? Let’s pick a few of the most high profile candidates:

Rocketlab
Relativity
Virgin Orbit
Astra
And ok, let’s add Stoke.

And in the simplest terms, try and show your broad assumptions (e.g. rocket development cost, launch facility development cost, per launch cost, per launch price, launch frequency and estimated timeframe).

I would be most interested if anyone gets to a profitability horizon earlier than say 2028 or thereabouts. And that’s under current market conditions. Probably 2030, even.

Note, I haven’t done the calculations. Just going on gut feel at the moment.

By "profitable" do you mean "on a per-launch basis" or "recouping all past development costs as well as costs from when they weren't launching profitably"? Because by the former metric, Rocket Lab launches could be profitable as early as this year, in principle -- they've said that three full-price launches per quarter are all they need for breakeven, and also that they anticipate 15 launches this year (although admittedly the lack of launches so far in February isn't exactly helping that).

If you mean "also including all development costs," I believe Rocket Lab spent on the order of $100M to develop Electron, and sure, even if they could get to like $2M profit per launch, that's well over three years (at 15 launches/year) to recoup. Adding in other expenses (and a profit margin below $2M), 2028 seems pretty reasonable honestly. Well, not taking Neutron into account, but that's a separate bundle of development expenses which need to be paid down.

[M.E.T.]

Did some thinking (always dangerous, I know).

So I thought, how about turning this around. To those (and there are many) who disagree with my view that smallsat launchers have a weak business case, what is your estimated timeframe for each of the following to be profitable from launch services? Let’s pick a few of the most high profile candidates:

Rocketlab
Relativity
Virgin Orbit
Astra
And ok, let’s add Stoke.

And in the simplest terms, try and show your broad assumptions (e.g. rocket development cost, launch facility development cost, per launch cost, per launch price, launch frequency and estimated timeframe).

I would be most interested if anyone gets to a profitability horizon earlier than say 2028 or thereabouts. And that’s under current market conditions. Probably 2030, even.

Note, I haven’t done the calculations. Just going on gut feel at the moment.

By "profitable" do you mean "on a per-launch basis" or "recouping all past development costs as well as costs from when they weren't launching profitably"? Because by the former metric, Rocket Lab launches could be profitable as early as this year, in principle -- they've said that three full-price launches per quarter are all they need for breakeven, and also that they anticipate 15 launches this year (although admittedly the lack of launches so far in February isn't exactly helping that).

If you mean "also including all development costs," I believe Rocket Lab spent on the order of $100M to develop Electron, and sure, even if they could get to like $2M profit per launch, that's well over three years (at 15 launches/year) to recoup. Adding in other expenses (and a profit margin below $2M), 2028 seems pretty reasonable honestly. Well, not taking Neutron into account, but that's a separate bundle of development expenses which need to be paid down.

Thanks for that.

To be frank, I wasn’t even including Electron, as it seems obvious that Electron has proven to be uncompetitive in the current launch market, hence RL’s pivot to Neutron. So in the case of RL, I was referring to the Neutron program turning a profit. And since I’m talking from the perspective of an investor looking at the strength of a business case, it of course has to mean overall program profitability, else what’s the point?

Coming back to Electron, launching 300kg for $7M is not a competitive offering in the current market (and certainly not in the market of the near future). RL has been open about the fact that their constraint is not supply, it is demand. Not enough demand for Electron at that price point.

So Electron is already moot as a business case.

[Asteroza]

Did some thinking (always dangerous, I know).

So I thought, how about turning this around. To those (and there are many) who disagree with my view that smallsat launchers have a weak business case, what is your estimated timeframe for each of the following to be profitable from launch services? Let’s pick a few of the most high profile candidates:

Rocketlab
Relativity
Virgin Orbit
Astra
And ok, let’s add Stoke.

And in the simplest terms, try and show your broad assumptions (e.g. rocket development cost, launch facility development cost, per launch cost, per launch price, launch frequency and estimated timeframe).

I would be most interested if anyone gets to a profitability horizon earlier than say 2028 or thereabouts. And that’s under current market conditions. Probably 2030, even.

Note, I haven’t done the calculations. Just going on gut feel at the moment.

By "profitable" do you mean "on a per-launch basis" or "recouping all past development costs as well as costs from when they weren't launching profitably"? Because by the former metric, Rocket Lab launches could be profitable as early as this year, in principle -- they've said that three full-price launches per quarter are all they need for breakeven, and also that they anticipate 15 launches this year (although admittedly the lack of launches so far in February isn't exactly helping that).

If you mean "also including all development costs," I believe Rocket Lab spent on the order of $100M to develop Electron, and sure, even if they could get to like $2M profit per launch, that's well over three years (at 15 launches/year) to recoup. Adding in other expenses (and a profit margin below $2M), 2028 seems pretty reasonable honestly. Well, not taking Neutron into account, but that's a separate bundle of development expenses which need to be paid down.

Thanks for that.

To be frank, I wasn’t even including Electron, as it seems obvious that Electron has proven to be uncompetitive in the current launch market, hence RL’s pivot to Neutron. So in the case of RL, I was referring to the Neutron program turning a profit. And since I’m talking from the perspective of an investor looking at the strength of a business case, it of course has to mean overall program profitability, else what’s the point?

Coming back to Electron, launching 300kg for $7M is not a competitive offering in the current market (and certainly not in the market of the near future). RL has been open about the fact that their constraint is not supply, it is demand. Not enough demand for Electron at that price point.

So Electron is already moot as a business case.

I wouldn't count out Electron quite yet, if only because the VLEO market is starting to stir. Whether that actually materializes I can't say ( I think that requires a working air breathing electric thruster demo to really hype up VLEO), but Electron might face the unusual issue of needing a payload fairing upgrade.

[edzieba]

To be frank, I wasn’t even including Electron, as it seems obvious that Electron has proven to be uncompetitive in the current launch market, hence RL’s pivot to Neutron.

Since Electron is
- Still flying missions successfully
- Still manifested to fly future missions
- Still competing for and winning contracts for future missions
The conclusion that it is uncompetitive is unsupported by reality.

[Robotbeat]

Stoke is technically medium lift launch, by the way. Doubtless they’ll be primarily serving smallsats, just like Falcon 9.

[Robotbeat]

To be frank, I wasn’t even including Electron, as it seems obvious that Electron has proven to be uncompetitive in the current launch market, hence RL’s pivot to Neutron.

Since Electron is
- Still flying missions successfully
- Still manifested to fly future missions
- Still competing for and winning contracts for future missions
The conclusion that it is uncompetitive is unsupported by reality.

It's not clear Electron is viable long-term to ensure the company can maintain the capability. The price is rather high, and competition is rising. RocketLab knows this, which is why their earlier plans for 100 Electrons built per year as a path to high profits has given way to a focus on satellite manufacturing, satellite services, reusable Electron, and reusable Neutron.

[RedLineTrain]

To be frank, I wasn’t even including Electron, as it seems obvious that Electron has proven to be uncompetitive in the current launch market, hence RL’s pivot to Neutron.

Since Electron is
- Still flying missions successfully
- Still manifested to fly future missions
- Still competing for and winning contracts for future missions
The conclusion that it is uncompetitive is unsupported by reality.

It appears that in its current structure (Electron + Neutron dev), Rocket Lab is "default dead," meaning that cash flow is negative (free cash-flow for the first nine months of 2022 was -$110 million).  Because of this, Rocket Lab ultimately is dependent on the funding environment.

The funding environment has been very restrictive lately.  Of course, we don't know the environment in the future.  And Rocket Lab has potential strategic funders, such as Lockheed Martin.

Rocket Lab does have a fair bit of cash (give or take $500 million), so they have runway to try to become "default alive."

[trimeta]

To be frank, I wasn’t even including Electron, as it seems obvious that Electron has proven to be uncompetitive in the current launch market, hence RL’s pivot to Neutron.

Since Electron is
- Still flying missions successfully
- Still manifested to fly future missions
- Still competing for and winning contracts for future missions
The conclusion that it is uncompetitive is unsupported by reality.

It appears that in its current structure (Electron + Neutron dev), Rocket Lab is "default dead," meaning that cash flow is negative (free cash-flow for the first nine months of 2022 was -$110 million).  Because of this, Rocket Lab ultimately is dependent on the funding environment.

The funding environment has been very restrictive lately.  Of course, we don't know the environment in the future.  And Rocket Lab has potential strategic funders, such as Lockheed Martin.

Rocket Lab does have a fair bit of cash (give or take $500 million), so they have runway to try to become "default alive."

Sure, cash flow is negative because they're spending more on Neutron development than they're making in revenue, and of course Neutron is earning them $0. The question becomes whether Neutron comes online and begins to add to the revenue sheet (not even "becomes net profitable," just has some profit to offset ongoing costs) before their cash reserves hit zero.

[su27k]

Launch demand remains high despite industry struggles

Despite concerns about the viability of many new launch vehicle developers, many in the industry say those vehicles are needed as demand for launch outstrips supply.

During a panel at the SmallSat Symposium in Mountain View, California, Feb. 9, spacecraft developers and launch integrators said that, even with the predictions of “bloodletting” among small launch companies because of technical and financial challenges, new vehicles are needed to meet growing demand.

“There are not enough launch companies. There are not enough launch vehicles available to fill that demand,” said Tom Choi, chief executive of Saturn Satellite Networks, a company developing a network of small geostationary satellites.

[M.E.T.]

Launch demand remains high despite industry struggles

Despite concerns about the viability of many new launch vehicle developers, many in the industry say those vehicles are needed as demand for launch outstrips supply.

During a panel at the SmallSat Symposium in Mountain View, California, Feb. 9, spacecraft developers and launch integrators said that, even with the predictions of “bloodletting” among small launch companies because of technical and financial challenges, new vehicles are needed to meet growing demand.

“There are not enough launch companies. There are not enough launch vehicles available to fill that demand,” said Tom Choi, chief executive of Saturn Satellite Networks, a company developing a network of small geostationary satellites.

This is a statement based on wishful thinking, not on reality.

Rocketlab has loads of excess supply. Where is the claimed pent up demand?

[edzieba]

Launch demand remains high despite industry struggles

Despite concerns about the viability of many new launch vehicle developers, many in the industry say those vehicles are needed as demand for launch outstrips supply.

During a panel at the SmallSat Symposium in Mountain View, California, Feb. 9, spacecraft developers and launch integrators said that, even with the predictions of “bloodletting” among small launch companies because of technical and financial challenges, new vehicles are needed to meet growing demand.

“There are not enough launch companies. There are not enough launch vehicles available to fill that demand,” said Tom Choi, chief executive of Saturn Satellite Networks, a company developing a network of small geostationary satellites.

This is a statement based on wishful thinking, not on reality.

If the smallsat launch customers driving the demand telling you directly what the demand is is not enough to convince you of reality, then I don't think anything will.

[M.E.T.]

Launch demand remains high despite industry struggles

Despite concerns about the viability of many new launch vehicle developers, many in the industry say those vehicles are needed as demand for launch outstrips supply.

During a panel at the SmallSat Symposium in Mountain View, California, Feb. 9, spacecraft developers and launch integrators said that, even with the predictions of “bloodletting” among small launch companies because of technical and financial challenges, new vehicles are needed to meet growing demand.

“There are not enough launch companies. There are not enough launch vehicles available to fill that demand,” said Tom Choi, chief executive of Saturn Satellite Networks, a company developing a network of small geostationary satellites.

This is a statement based on wishful thinking, not on reality.

If the smallsat launch customers driving the demand telling you directly what the demand is is not enough to convince you of reality, then I don't think anything will.

They have a motive to say that. They want more competition and more options. Because it strengthens their bargaining position. That doesn’t mean they are willing to pay what it takes to make those competitors sustainable.

The proof is in the pudding. Where is this demand, given that Electron is sitting idle with a wide open manifest?

[john smith 19]

They have a motive to say that. They want more competition and more options. Because it strengthens their bargaining position. That doesn’t mean they are willing to pay what it takes to make those competitors sustainable.

The proof is in the pudding. Where is this demand, given that Electron is sitting idle with a wide open manifest?

There is something to be said for this PoV. OTOH the reality is

Since Electron is
- Still flying missions successfully
- Still manifested to fly future missions
- Still competing for and winning contracts for future missions
The conclusion that it is uncompetitive is unsupported by reality.

As always customers want to have their cake and eat it.   

They want their payload to their orbit at SX Rideshare prices.   

So the customers have a choice and the sLV mfgs have a choice.

Customers either a)Accept the Rideshare orbit and figure out how to make their payload work (either in that orbit or some scheme to get it to their preferred orbit, possibly by buying some RL thrusters) or b)Raising more funds to afford their own launch.

OTOH  the sLV mfgs have choices too.
Do they thinkg some cash flow, and keeping their launch crews in practice, is better than no cash flow and leaving their team to stagnate? That's got to be on a case by case basis.
Can they flex their design to one that can operate sustainably at the price ceiling SX have put in the market? Can they raise the money from their investors to do so?

Jon Goff said he's talked to a number of payload companies that are "not happy" with the Rideshare orbit and/or schedule.  If there are enough of those, (and they are "not happy" enough to do something about it) then at least one sLV supplier should stay in business.

[EDIT So I'm thinking it's less a chess game, more a poker game. Bluffing is an element.]

The idea that RL's Electron (or any sLV)  may not be long term viable may be correct, but as Keynes observed "In the long term, we're all dead" That could be decades away. 

[ringsider]

By "profitable" do you mean "on a per-launch basis" or "recouping all past development costs as well as costs from when they weren't launching profitably"?

Not one single investor cares about the $X00m R&D cost being returned on a per-launch basis.

Not one.

If anybody thinks that is the investment model they must have been asleep during the past couple of years.

[M.E.T.]

By "profitable" do you mean "on a per-launch basis" or "recouping all past development costs as well as costs from when they weren't launching profitably"?

Not one single investor cares about the $X00m R&D cost being returned on a per-launch basis.

Not one.

If anybody thinks that is the investment model they must have been asleep during the past couple of years.

Well, I guess the last couple of years were a rude awakening for space investors, judging by share prices. SpaceX excluded, of course.

[RedLineTrain]

Launch demand remains high despite industry struggles

Despite concerns about the viability of many new launch vehicle developers, many in the industry say those vehicles are needed as demand for launch outstrips supply.

During a panel at the SmallSat Symposium in Mountain View, California, Feb. 9, spacecraft developers and launch integrators said that, even with the predictions of “bloodletting” among small launch companies because of technical and financial challenges, new vehicles are needed to meet growing demand.

“There are not enough launch companies. There are not enough launch vehicles available to fill that demand,” said Tom Choi, chief executive of Saturn Satellite Networks, a company developing a network of small geostationary satellites.

This is a statement based on wishful thinking, not on reality.

Rocketlab has loads of excess supply. Where is the claimed pent up demand?

Could you point out or link to a discussion of this loads of excess supply?  I'm interested in what RL has to say on this.

Tom Choi has a long, interesting history in the industry.  It may be that he is jawboning RL's launch price down.

[trimeta]

Launch demand remains high despite industry struggles

Despite concerns about the viability of many new launch vehicle developers, many in the industry say those vehicles are needed as demand for launch outstrips supply.

During a panel at the SmallSat Symposium in Mountain View, California, Feb. 9, spacecraft developers and launch integrators said that, even with the predictions of “bloodletting” among small launch companies because of technical and financial challenges, new vehicles are needed to meet growing demand.

“There are not enough launch companies. There are not enough launch vehicles available to fill that demand,” said Tom Choi, chief executive of Saturn Satellite Networks, a company developing a network of small geostationary satellites.

This is a statement based on wishful thinking, not on reality.

Rocketlab has loads of excess supply. Where is the claimed pent up demand?

Could you point out or link to a discussion of this loads of excess supply?  I'm interested in what RL has to say on this.

Tom Choi has a long, interesting history in the industry.  It may be that he is jawboning RL's launch price down.

Peter Beck has said on many occasions that their launch cadence is limited by not having enough customers (that is, demand), not their ability to build and launch Electrons (that is, supply).

[M.E.T.]

Launch demand remains high despite industry struggles

Despite concerns about the viability of many new launch vehicle developers, many in the industry say those vehicles are needed as demand for launch outstrips supply.

During a panel at the SmallSat Symposium in Mountain View, California, Feb. 9, spacecraft developers and launch integrators said that, even with the predictions of “bloodletting” among small launch companies because of technical and financial challenges, new vehicles are needed to meet growing demand.

“There are not enough launch companies. There are not enough launch vehicles available to fill that demand,” said Tom Choi, chief executive of Saturn Satellite Networks, a company developing a network of small geostationary satellites.

This is a statement based on wishful thinking, not on reality.

Rocketlab has loads of excess supply. Where is the claimed pent up demand?

Could you point out or link to a discussion of this loads of excess supply?  I'm interested in what RL has to say on this.

Tom Choi has a long, interesting history in the industry.  It may be that he is jawboning RL's launch price down.

https://arstechnica.com/science/2022/08/peter-beck-explains-why-electron-may-only-ever-launch-10-15-times-a-year/


“The reality is that we built everything to be able to launch once a week," Beck said. "Everything in the factory is designed to be able to process and push through one rocket a week. So from an infrastructure perspective, we can do that. And from a system's perspective, we can do that. It would just require a larger workforce. But the reality is that it's the market that's the driver. For us, our cadence today is 100 percent driven by market demand."

The demand is less than Rocket Lab—and presumably other small launch vehicle developers—may have anticipated several years ago. In 2018, Beck told Ars he expected Electron to launch 50 times per year. Rocket Lab has since delivered on its promise to develop a reliable, relatively low-cost vehicle that it can fly when needed. But the satellites are not stacking up, waiting for a rocket.”

[RedLineTrain]

Launch demand remains high despite industry struggles

Despite concerns about the viability of many new launch vehicle developers, many in the industry say those vehicles are needed as demand for launch outstrips supply.

During a panel at the SmallSat Symposium in Mountain View, California, Feb. 9, spacecraft developers and launch integrators said that, even with the predictions of “bloodletting” among small launch companies because of technical and financial challenges, new vehicles are needed to meet growing demand.

“There are not enough launch companies. There are not enough launch vehicles available to fill that demand,” said Tom Choi, chief executive of Saturn Satellite Networks, a company developing a network of small geostationary satellites.

This is a statement based on wishful thinking, not on reality.

Rocketlab has loads of excess supply. Where is the claimed pent up demand?

Could you point out or link to a discussion of this loads of excess supply?  I'm interested in what RL has to say on this.

Tom Choi has a long, interesting history in the industry.  It may be that he is jawboning RL's launch price down.

https://arstechnica.com/science/2022/08/peter-beck-explains-why-electron-may-only-ever-launch-10-15-times-a-year/


“The reality is that we built everything to be able to launch once a week," Beck said. "Everything in the factory is designed to be able to process and push through one rocket a week. So from an infrastructure perspective, we can do that. And from a system's perspective, we can do that. It would just require a larger workforce. But the reality is that it's the market that's the driver. For us, our cadence today is 100 percent driven by market demand."

The demand is less than Rocket Lab—and presumably other small launch vehicle developers—may have anticipated several years ago. In 2018, Beck told Ars he expected Electron to launch 50 times per year. Rocket Lab has since delivered on its promise to develop a reliable, relatively low-cost vehicle that it can fly when needed. But the satellites are not stacking up, waiting for a rocket.”

Perfect.  Thank you.  It does sound like Tom Choi is unhappy with the quoted prices from RL.