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DeepSpace: A critical juncture for SpaceX, Blue Origin, ULA, other players

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This is a free preview of DeepSpace, Teslarati’s new member-only weekly newsletter. Each week, I’ll be taking a deep-dive into the most exciting developments in commercial space, from satellites and rockets to everything in between. Sign up for Teslarati’s newsletters here to receive a preview of our membership program.

A high-pressure competition between all four major US launch providers – SpaceX, ULA, Blue Origin, and Orbital ATK (now NGIS) – is about to head into its most critical stage, a period of 60 days allotted for interested parties to submit their completed proposals. According to the US Air Force (USAF), the final request for proposals (RFP) could come as early as March 29th, giving the four aforementioned companies until May 28th to complete their proposals.

All things considered, the growing pressure and some of the USAF’s strategy behind the program – known as Launch Service Procurement (LSP) Phase 2 – has raised significant questions that remain largely unanswered and lead to a few mild bouts of strife or unhappiness from contract competitors. Most notably, Blue Origin – having just won a USAF development contract worth $500M – has repeatedly requested that the USAF and Department of Defense (DoD) delay the RFP and contract awards until 2021, according to Space News’ Sandra Erwin. Meanwhile, a lack of clarification from the USAF means that it’s unclear whether the strategy behind launch contract awards (LSP) will end up contradicting or undermining a partially connected development program known as Launch Service Agreements (LSA) that saw the USAF award ~$2B to three providers (excluding SpaceX) between 2018 and 2024.

Battle of the Acronyms: LSP vs. LSA

  • Recently rebranded by the US military as the National Security Space Launch (NSSL) program, LSP Phase 1 and 2 and LSA are the latest major procurement initiatives begun under the Evolved Expendable Launch Vehicle (EELV) program, spun up in the 1990s to provide a firmer foundation for the commercial launch of military spacecraft after the 1986 Shuttle Challenger disaster pushed most satellites off of the platform.
  • Phase 2 of the EELV program has been ongoing for several years and will culminate with the procurement of 25+ launch contracts (LSP) from two providers no earlier than 2020. The USAF’s Launch Service Agreements are also a major strategic feature of Phase 2, nominally seeing the military branch contribute major funding to assist in the development of three separate launch vehicles (New Glenn, Vulcan, and Omega) with the intention of ultimately certifying those rockets for EELV (now NSSL) launches.
    • LSA also saw the USAF award several tens of millions to SpaceX, Blue Origin, and Aerojet Rocketdyne to develop capabilities centered around advanced, new rocket engines (BE-4, AR-1, and Raptor), but the latest phase of LSA is valued at least several times higher than its earlier engine-specific awards.
    • Oddly, the purpose of LSA was – at least on the cover – to effectively ensure that the Air Force had multiple (more than two) providers and thus preserve a healthy, competitive military launch market. A senior leader specifically stated that “the goal of [LSA] is to make sure [the US military has] a competitive industrial base.”
      • Aside from an initial $181M awarded to Blue Origin, ULA, and Orbital ATK (now Northrop Grumman Innovation Systems, NGIS) in 2018 and 2019, the remaining funding – up to $320M for Blue Origin’s New Glenn, $610M for NGIS’ Omega, and $785M for ULA’s Vulcan –  would be dispersed to each provider between 2020 and 2024.
      • However, an odd and controversial bit of language behind the coming five-year launch services procurement (LSP) initiative would completely cut off funding to LSA awardees in the event that they fail to be awarded launches from the latest LSP.
      • Additionally, the LSP awards are strictly meant – apparently very intentionally – to be distrubuted among two launch providers, despite a minimum at least four being able (SpaceX) or required (ULA, Blue, NGIS) to enter a bid.
      • In other words, this guarantees that either one or two of the three LSA awardees would have the vast majority of their supposedly awarded development funding cut off after FY2020, four years early.
  • Despite continued protests from a number of stakeholders, the USAF has refused to budge from its decision to simultaneously A) create a duopoly, B) defeat the purpose of LSA awards, and C) mass-award ~25 launch contracts to two providers in 2020, anywhere from 12-24 months prior to the planned inaugural launches of all three LSA-funded rockets.
    • Without cost-sharing development funds from the USAF and a chance of winning more than a handful of US military launch contracts between now and the late 2020s, it can be all but guaranteed that an LSA funding cutoff will either indefinitely pause or slow to a crawl a given provider’s development of their proposed launch vehicle.

A rocket and a hard place

  • This sticky situation thus offers up a few potential ways that this badly-designed (or entirely dishonest) military launch development and procurement strategy will end up by the end of 2020. One way or another, the current strategy as it stands will end up providing two (or one, given that SpaceX will not receive LSA funding) companies with several years of development funding and at least five years of bountiful, guaranteed launch contracts.
    • The four providers and two LSP slots available offer a set range of possible alternate realities, limited by political barriers that would, say, almost invariably prevent the USAF from severely harming ULA by cutting off the vast majority of the company’s only real source of income for 5+ years.
  1. ULA and SpaceX win: This maintains the status quo, wholly invalidating the point of using LSA funds to ensure “a competitive industrial base.” NGIS likely cancels/freezes all Omega development with no chance of competing in commercial markets. Blue Origin owner Jeff Bezos could significantly delay New Glenn’s readiness for military missions if he fails to invest an additional $500M in infrastructure. Likeliest result: a marginally competitive duopoly.
  2. ULA wins, SpaceX loses: Having just certified Falcon 9 – and nearly Falcon Heavy – for high-value military launches and awarded SpaceX a total of 10 launch contracts (9 yet to be completed), the USAF could effectively spit in SpaceX’s face and award ULA and Blue Origin or NGIS LSP’s 25+ launch contracts.
  • It’s hard to exaggerate just how much of a slight this would be perceived as by SpaceX and its executives, CEO Elon Musk in particular. The USAF would be risking the creation of a major political enemy, one which has already demonstrated a willingness to take the federal government to court and win. The USAF/DoD would effectively be hedging their bets against an assumption that SpaceX’s nine present military launch contracts will sate the company and ensure that SpaceX indefinitely remains a certified EELV/NSSL provider.
    • In this eventuality, either Blue Origin or NGIS would lose LSA funding and the prospect of almost any military launch contracts until the late 2020s. For NGIS, this would likely kill Omega.
  • At the end of the day, it’s sadly conceivable that the USAF/DoD may end up awarding LSP contracts to ULA (effectively a politically-forced hand) and NGIS, the latter assuring Omega’s survival. The military would thus be assuming that the political fallout created with SpaceX and Blue Origin would not be enough to severely harm their relationships, while also assuming that their much stronger commercial prospects and independent funding sources would ensure that each provider remains certified and willing to compete for future NSSL/EELV launches.

Regardless of what happens, the contradictory ways the USAF/DoD have structured their LSA and LSP programs seems bizarrely intent on creating major headaches and potential problems where that could easily be avoided with extraordinarily simple changes, namely removing the inexplicable cap and  allowing three or more companies to win some of the ~25 LSP launch contracts).


Mission Updates

  • The second launch of Falcon Heavy – the rocket’s commercial debut – is still scheduled to occur as early as April 7th.
  • After Falcon Heavy, Cargo Dragon’s CRS-17 resupply mission is firmly scheduled for April (April 25th), while the first dedicated Starlink launch is now NET May 2019.

Photo of the Week:

SpaceX CEO Elon Musk offered a glimpse of a 1650 Kelvin (2500ºF/1400ºC) test of Starship’s metallic heat shield, simulating mid-range temperatures such a shield’s windward side might experience during an orbital-velocity reentry.(c. Elon Musk/SpaceX)

Eric Ralph is Teslarati's senior spaceflight reporter and has been covering the industry in some capacity for almost half a decade, largely spurred in 2016 by a trip to Mexico to watch Elon Musk reveal SpaceX's plans for Mars in person. Aside from spreading interest and excitement about spaceflight far and wide, his primary goal is to cover humanity's ongoing efforts to expand beyond Earth to the Moon, Mars, and elsewhere.

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Investor's Corner

SpaceX to report first-ever earnings today: here’s what to expect

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Credit: SpaceX

Elon Musk’s space exploration company, SpaceX (NASDAQ: SPCX), is set to report its earnings for the second quarter today in what will be its first-ever earnings call since going public in July.

SpaceX is trading down roughly 25 percent from its IPO. These early stock signals are usually a bit tumultuous, and considering this is the first company actively launching rockets that is available on the stock exchange, investors might have a tendency to be a bit skittish.

However, there are going to be some details that investors will hear for the first time today on the earnings call. Here’s what to look for:

Wall Street Expectations

Revenue is expected to fall somewhere around $6.8 billion, and will be heavily driven by Starlink, which is SpaceX’s widely popular satellite internet platform that has been adopted by numerous airlines, cruise ships, and other maritime operations. It is also available for consumers at home or in their cars.

Earnings Per Share (EPS) expectations fall at a net loss of $0.23 per share. Wall Street sees this as a total net loss of roughly $1.9 billion.

EBITDA is expected to come in between $2 billion and $2.1 billion.

What Investors Want to Know

Tesla uses the Say platform to help work with both retail and institutional investors to answer relevant and quality questions that address concerns or questions that they might have.

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However, SpaceX is doing things differently, as the company launched its own Investor Relations website where these questions are being fielded. Just like the Tesla questions, they seem to be less focused on the operational tasks and overall progress of the company, and more novelty.

Here are the top five:

  • Has the team thought about what possibilities there are with your mascot Asteroid? Whether it’s starting additional foundations for kids in its name, helping kids learn about space, etc. Kids are our future, and Asteroid would be a fun and easy way to help.
  • Baby Asteroid is already making a difference through charity around the world. Could SpaceX take it even further with programs that inspire kids to explore space?
  • SpaceX has some legendary vehicle names. Would you ever allow the public to name a Starship, even knowing there is a 99% chance it becomes Shipy McShipface?
  • When can we expect to see more footage of the Human Landing System?
  • Will Asteroid (your mascot) go to Mars?

SpaceX will report its earnings today, August 4, at 4:30 P.M. EDT.

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Elon Musk

SpaceX’s biggest test yet arrives this week and it’s not a rocket launch

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SpaceX will report second quarter results after the market closes on Tuesday, August 4, marking the first time the company has opened its books to the public since its record IPO in June. Management will host a live audio only webcast at 4:30 p.m. ET, streamed on X, with no dial in option.

The debut carries more weight than a typical first quarter as a public company. Two trading days after the release, on August 6, the first tranche of SpaceX’s lockup expires, freeing roughly 911.5 million insider and employee shares, worth well over $100 billion at current prices and the largest such release in Wall Street history. A second, larger tranche tied to the stock trading 30 percent above its $135 IPO price never triggered, since shares have spent most of July trading below that price.

Wall Street’s models point to revenue near $6.9 billion for the quarter, up sharply from the $4.69 billion SpaceX reported in the first quarter, with a narrower per share loss than the $1.27 posted three months earlier, according to estimates compiled by Motley Fool. Those numbers will be the first look at how SpaceX’s three segments, Starlink, launch and AI, are performing independently.

SpaceX scores another massive Pentagon deal to support military satellites

Investors heading into the call have a specific list of questions. How many net new Starlink subscribers did SpaceX add after ending March with 10.3 million, and is average revenue per user holding up as the service expands into lower income markets. How much of the AI segment’s revenue reflects contract signings with Anthropic, Google and Reflection AI this year, deals that combined could annualize to nearly $28 billion if fully ramped. Whether capital expenditures, which nearly doubled in the AI segment alone between 2024 and 2025, are still accelerating or starting to plateau. And whether management offers any forward guidance at all, something SpaceX has never done publicly.

The report will also land days after Elon Musk publicly denied a Wall Street Journal report describing internal planning to separate Tesla’s China business ahead of a potential Tesla-SpaceX merger. Whether Musk or SpaceX executives address that speculation on the call, even indirectly, maybe something investors will be listening for on Tuesday.

As Teslarati reported after Musk’s own warning to short sellers last week, the CEO has made clear he expects skeptics to be proven wrong over time. Tuesday will be the first chance for the numbers themselves to make that case.

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SpaceX’s Starship just got filmed by its own cargo

SpaceX released new footage of Starship in space captured by the Starlink satellites it deployed.

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SpaceX released a new video Friday evening showing Starship from an angle showcased by its own Starlink satellites, watching the rocket drift away in orbit.

The 65 second clip, posted on X, stitches together footage from four cameras mounted on a single Starlink V3 satellite. It opens with a close view of Starship’s 171 foot upper stage, still catching sunlight, then pulls back as the two spacecraft separate.

The footage comes from Starship’s 13th flight test, which launched July 24 from Starbase after a scrubbed attempt and an abort caused by an engine issue the week before. When Flight 13 finally flew, it carried the first batch of functional Starlink V3 satellites Starship has ever deployed, twenty of them, with six equipped with cameras meant to scan the ship’s heat shield during reentry.

Flight 13 checked most of its boxes. Starship deployed all 20 satellites, relit a Raptor engine in space, and splashed down softly in the Indian Ocean off Western Australia. Musk’s longer term plan calls for a Starlink V3 constellation of 100,000 satellites, according to a recent FCC filing, with Starship as the only vehicle capable of launching them at the volume that requires. Each Starship flight is designed to carry up to 60 V3 satellites once the vehicle reaches routine service, well beyond what Falcon 9 can carry in a single mission.

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Starship is next expected to fly with an attempt at catching the ship itself with the launch tower’s mechanical arms, a maneuver SpaceX has so far reserved for the Super Heavy booster.

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