For nearly a decade, Russia has been threatening to exit the International Space Station and take its space station modules with it, depriving ISS of its ability to maneuver in orbit and compromising life support. Years of negotiations succeeded in convincing the Russians to stay longer than planned. Even so, in 2030, NASA says the International Space Station's service life will finally expire.
And then Elon Musk will kill it.
Image source: Getty Images.
Taking out a hit contract on the ISS
That's the upshot of a NASA contract awarded late last month, in which the space agency promised to pay Elon Musk's SpaceX space company $843 million to build a "U.S. Deorbit Vehicle" to perform a "safe and responsible deorbit of the International Space Station in a controlled manner after the end of its operational life in 2030."
It's not 100% clear that the "U.S" designation of the deorbit vehicle means that SpaceX will be deorbiting only the U.S. sections of ISS. Four other space agencies -- specifically, the Canadian Space Agency, European Space Agency, Japan Aerospace Exploration Agency, and Russia's State Space Corporation Roscosmos -- may have other plans for their respective modules and equipment aboard ISS. Roscosmos in particular has never definitively abandoned its plans to detach its own modules, for example, to form the basis for a new, all-Russian station.
But NASA is taking responsibility for the U.S. content of ISS at least, and will take possession of and operate SpaceX's deorbit vehicle once it has been delivered. As the agency explains, it intends to use the vehicle to "tug" or push ISS into a degenerating orbit in which it will burn up in the atmosphere, and the deorbit vehicle will burn up with it.
The space agency did ask for competitive bids in a couple of rounds of requests last year. NASA didn't reveal who else, in addition to SpaceX, may have bid on the contract, stating only that SpaceX won.
The space station is dead. Long live the space stations!
And that's not the only space station-related work that SpaceX has won, either. As you've probably heard by now, a total of four separate U.S.-based teams of companies are currently floating plans to build new space stations to enable continued low-Earth-orbit research once the ISS is no more. What you may not know is that SpaceX is playing a role in at least two of the four (with a third quite likely).
One of the teams, "Starlab," comprising companies both public (Northrop Grumman and Airbus (EADSY +0.98%)) and private (Voyager Space), announced earlier this year that it has hired SpaceX to loft its entire space station into orbit in one go. SpaceX's new Starship megarocket is scheduled to carry it up in 2028.
Two other companies, Vast Space and Axiom Space, proffering two separate alternative space stations, are hoping to beat the Starlab team into orbit with launches in 2025 and 2026, respectively. Vast has announced that it will use a SpaceX Falcon 9 rocket to launch its Haven-1 module into orbit next year. Axiom hasn't made a similar launch announcement, but it has a long relationship with SpaceX, using the latter's Falcon 9 to transport teams of astronauts to practice space work aboard ISS already. It's logical to assume that when the time to launch comes, Axiom will be hitching a ride with SpaceX as well.
What space investors need to know
Long story short, SpaceX is going to be making a lot of money from space station work over the next few years, and it will make it both going and coming -- destroying the old ISS and helping to put new ISS replacements in orbit. Unfortunately, SpaceX is not currently a publicly traded company, and it has no plans to IPO anytime soon, making it difficult for investors to partake of these profits. But by facilitating the work of other contractors helping to put space stations in orbit, SpaceX is making those other companies potentially more valuable.
OTC: EADSY
Key Data Points
Which of these publicly traded companies looks most attractive as an investment? While the valuation isn't exactly compelling yet, my hunch is that Airbus (one of the partners in Starlab) offers the most value at this precise moment. Priced just a little over 26 times earnings, it's cheaper than Northrop, Starlab's other big-name partner -- and unlike Northrop, carries no net debt on its balance sheet.
If Boeing was the biggest aerospace name involved in building the original International Space Station, its archrival Airbus now looks like the biggest and best-valued publicly traded backer of the ISS replacement.
