After a Bloomberg report revealed SpaceX opened discussion for selling insider shares, a boom of discussion has now opened up to all the possibilities that could occur if the company went public.
Quilty Space Co-CEO Chris Quilty joins Yahoo Finance to discuss the potential for future investments in space exploration and how SpaceX's dominance will be a challenge for future companies.
"The problem here is, right now, in the near term, we are in a bit of a constrained environment for launch, and so many of these companies that need to build out constellations, raise capital, they are, to some degree, being slowed down in their ability to get to revenue because the launch environment has become so tight," Quilty says.
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RACHELLE AKUFFO: So then, Chris, when you think about where investment goes from here, I mean, different sorts of space investment we've been also tracking what's been happening with Virgin Galactic pulling back there. So where are the most lucrative spaces that perhaps other companies could try and get into since SpaceX is so dominant in this space, in the launch space.
CHRIS QUILTY: Yeah, so I'd say SpaceX has been an incredible boon for this industry and what they've done with launch costs. I mean, look, the reason we're undergoing a space renaissance today is that basically launch costs had been unchanged at $10,000 to $20,000 a kilogram for 50 years. And SpaceX is bringing that-- brought that down. You can buy for $6,500 a kilogram a rideshare launch. You can buy an entire rocket and drive your launch costs down to about 1,500 bucks if you launch with a Falcon Heavy.
It's lowering those launch costs that have suddenly enabled people to look at business models, whether it's manufacturing in space or building a data center on the moon, and suddenly the economics work. Like the launch costs have gotten to a point where new business models are possible. We just published a report, and we looked at over 350 constellations that are planned, most of these have some level of funding, many of them are well on the way, generating revenue. And that's going to drive about 20,000 satellites that need to get launched before the end of the decade.
SpaceX is going to grab a big chunk of that. And we haven't talked about Starship. That could take up a lot of capacity. But the problem here is right now in the near term, we're in a bit of a constrained environment for launch. And so many of these companies that need to build out constellations, raise capital, they're to some degree being slowed down in their ability to get to revenue because the launch environment has become so tight.
The satellite communications industry, which is the largest traditional industry here is what SpaceX is targeting with the Starlink. But to put it in perspective-- and I know you're going to ask the question the rumors around valuation going up here-- I can't confirm them but I've just seen the news articles. The biggest challenge for them is that the entire satellite communications industry is only around $25 billion in revenue. And if you're looking at 150 or $170 billion valuation for Starlink, you have to square that circle with the fact that they've got a launch business that historically has been about $5 billion a year and a telecom business in Starlink that fair enough, if you take some of the largest telecoms in the world from NTT, Deutsche Telekom, T-Mobile, Verizon, those companies have like 110 to $180 billion valuation.
So you can kind get there if you believe they can grow to that scale. They would certainly be the first company in the satellite industry to move out to large enterprise, traditional markets that were served by terrestrial fiber. And they in fact think and will need to compete with many of those markets if they want to grow to the size that they're projecting.