NASA plans to pay Elon Musk nearly $850 million to dispose of its aging space station. Other companies will pay him even more money to replace him.
For nearly a decade, Russia has threatened to exit the International Space Station and take its space station modules with it, depriving the ISS of its ability to maneuver in orbit and endangering life support. Years of negotiations managed to convince the Russians to stay longer than planned. However, in 2030, NASA says the International Space Station’s service life will finally end.
And then Elon Musk will kill it.
Image source: Getty Images.
Getting a contract struck on the ISS
That’s the result 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 “US Deorbit Vehicle” to carry out a “safe and responsible deorbit of the International Space Station in a controlled manner after the end of its operational life in 2030.”
It is not 100% clear that the “US” designation of the deorbit means that SpaceX will only deorbit the US sections of the ISS. Four other space agencies — namely, the Canadian Space Agency, the European Space Agency, the Japan Aerospace Exploration Agency and the Russian state space corporation Roscosmos — may have other plans for modules and equipment. their respective aboard the ISS. Roscosmos in particular has never definitively abandoned its plans to detach its modules, for example, to form the basis for a new, all-Russian station.
But NASA is taking responsibility for the US content of the ISS at least, and will take over and operate SpaceX’s deorbit vehicle once it’s delivered. As the agency explains, it intends to use the vehicle to “pull” or push the ISS into a degenerate orbit in which it will burn up in the atmosphere and the deorbit vehicle will burn up with it.
The space agency sought competitive bids in several rounds of solicitations last year. NASA did not disclose who else, besides SpaceX, may have bid for the contract, saying only that SpaceX won.
The space station is dead. Long live the space stations!
And it’s also not the only space station-related job that SpaceX has won. As you’ve probably heard by now, a total of four separate teams of US-based companies are currently in plans to build new space stations to enable continued research in low Earth orbit after 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 possible).
One of the teams, Starlab, which includes public companies (Northrop Grumman AND Airbus (EADSY 1.20%)) and private (Voyager Space), announced earlier this year that it has hired SpaceX to launch it all space station in orbit in one go. SpaceX’s new Starship megarocket is scheduled to carry it in 2028.
Two other companies, Vast Space and Axiom Space, offering two separate alternative space stations, hope 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 has not made a similar launch announcement, but it has a long-standing relationship with SpaceX, using the latter’s Falcon 9 to transport teams of astronauts to practice space work aboard the ISS already. It’s logical to assume that when it comes time to launch, Axiom will hitch a ride with SpaceX as well.
What space investors need to know
In short, SpaceX will make a lot of money operating the space station over the next few years and keep it going and coming — tearing down the old ISS and helping put new ISS replacements into orbit. Unfortunately, SpaceX is not currently a publicly traded company and has no plans for an IPO anytime soon, making it difficult for investors to share in these gains. But by making it easier for other contractors who help put space stations into orbit, SpaceX is making those other companies potentially more valuable.
Which of these publicly traded companies looks the most attractive as an investment? While the estimate is not exactly compelling however, my sense is that Airbus (one of the partners in Starlab) offers the greatest value at this precise moment. At a price of just over 26 times earnings, it’s cheaper than Northrop, Starlab’s other high-profile partner — and unlike Northrop, it has no net debt on its balance sheet.
whether Boeing was the biggest name in aerospace involved in the construction of the original International Space Station, its rival Airbus now looms as the largest and most publicly valued backer of the ISS replacement.
Rich Smith has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.