Space Economy Investing Heats Up as Launch Costs Fall

Remy: Here on Wall Street, we've seen space companies skyrocket. These include AST, SpaceMobile and Rocket Labs. And we have some buzz around your space systems during its IPO yesterday, and SpaceX is second to none in this industry. It could be the first trillion dollar IPO. And that valuation only figures to grow, with Reuters saying it's exploring a merger with xAI.

Well, joining me to weigh in this morning is Dan Maguire analyst and autonomous technology and robotics for ARK invest. Well good morning Dan. Great to have you here. So first and foremost, SpaceX now operates two thirds of all satellites in orbit. So for an investor looking at the space sector, is there anyone else in the running? Or has Musk effectively created a monopoly that no one can catch for the next decade?

Daniel: Great to speak to you Remy, and thanks for having me on. So as you mentioned, reusable rockets is really starting to catapult the economy into the space age, and this is largely dominated by SpaceX. We believe they have a ten year lead on the industry, and the net of this is declining launch costs. We estimate they have cut launch costs by roughly 95% since 2008, which is really opening up the space economy and to add to your question on other players, that's where the likes of Rocket Lab comes into play. You know, Rocket Lab, is outside of SpaceX, the most active launch provider in the West, and more recently is leaning into national security through a plethora of acquisitions and just at the end of last year, won the largest contract in its history for national security satellites. SpaceX is leading the way and really opening up the space economy.

Remy: And I understand that your research shows how reusable rocket launch costs continue to fall, and the cost to launch a satellite plummeting from $15,000 per kilo to under $1,000. So if Starship pushes that down to just $100. What kind of new businesses- perhaps things we can't even do on earth, become the next big investment opportunity? Daniel: That's a great question, Remy. And as you mentioned, we think Starship is the unlock. We believe it can cut it to $100 per kilogram and opens up opportunities such as orbital data centers, which I'm sure you've covered a lot on the show, Remy, or even satellite connectivity, which is included in our Big Ideas 2026 report just published last week. believe the latter could have a $160 billion annual revenue opportunity.

And then this is just one example of all of the deep dives we've done on reusable rockets in our latest report.

Remy: And Dan, we used to think of space as a slow billion dollar government gamble, but now it's starting to look more like a fast moving tech business. So how should a regular investor out there value these companies differently now that space is becoming part of - or will be part of our everyday infrastructure moving forward.

Daniel: That's a great question. And, you know, this is why at ARK we have an open research ecosystem. Last year, in collaboration with Mach33, we put out an open source space valuation model for that very reason. To educate the everyday person on how they should value companies like SpaceX. This is an Excel. Anyone can download it. You can adjust the assumptions and really determine how you think SpaceX should be valued. And it's very applicable at the moment. Given all of the talk, as you mentioned, as a potential IPO this year, just this morning, potential news about a merger with xAI and a lot of exciting developments in the rocket space right now.

Remy:Yeah. And while I have you here, I want to ask you about artificial intelligence now. AI data centers are hungry for uninterrupted power, which is driving a massive rebound in nuclear or so. Do you think this is a permanent shift in how we power the future? Or more of a temporary trend?

Daniel: I think that the energy is foundational to any economy. Our research suggests over the next five years to support data center buildout as well as grow economies. We need to invest $10 trillion of CapEx globally. For context. Remy, that's roughly two x what we have spent over the last five years. And really, this is more relevant now than ever, as you mentioned, with hyperscalers and what our energy section in our latest Big Ideas report seeks to call out is really what's critical for future buildout. This has cost the client for solar for a battery.

And as you mentioned, nuclear energy. Maybe. Let's talk there for a second, Remy. You know, despite regulatory hurdles in the 70s slowing down nuclear. Look at the tailwinds facing the industry today. You have executive orders accelerating the buildout of advanced small modular reactors And this is really a big idea for us. And this is why we have names in our portfolio like Cameco, like BWX Technologies, Oklo, all of which are primed really well to benefit from a really big idea that is nuclear energy.

Remy: So very quickly we have 60s here. Does this actually mean that we could finally be heading toward a future where energy costs start to fall for consumers and businesses alike?

Daniel: Yeah. Well, critical to our research is the concept of Wright's law. This states for every cumulative doubling of power cast decline by a constant percentage. As I mentioned, this trend has held over history. Solar nuclear batteries. We believe more power buildout is required to continue this trend, and it will be a net win/win both for AI data centers who can get cheaper electricity and translate into the everyday residential customer for cheaper electricity prices as well.

Remy: Well, Dan, we will have to leave it there. But thank you so much for joining us and have a great weekend.

Daniel: Likewise. Thanks a lot, Remy.