The Space Race: “New Space” as a Promising Business Model

The upcoming initial public offering (IPO) of the aerospace company SpaceX is likely to make Elon Musk a trillionaire, while also significantly altering the composition of major stock market indices. “This brings the future-oriented sectors of aerospace and the space economy increasingly into the spotlight for many investors,” says Heinz-Werner Rapp, founder and director of the FERI Cognitive Finance Institute. This broader sector, also known as “New Space,” will not only offer enormous opportunities in the future but will also pose strategic challenges to established business models across many industries. In a detailed analysis on the topic of New Space, the FERI Cognitive Finance Institute predicted this trend early on. 

The Space Economy as a Strategic Opportunity 

“Unnoticed by many investors, space has become an extremely lucrative domain. Massive cost reductions have played a central role in this,” Rapp emphasizes. Over the past decade, prices for transporting payloads into Earth orbit have fallen by up to 90%. The use of reusable rocket modules, pioneered by SpaceX, has been a major factor in this. “Launching satellites and other objects into orbit is thus becoming a predictable and profitable business model for the first time,” explains Rapp. In the future, this will offer the opportunity to shift the infrastructure of entire economic sectors—especially in the field of data communication—from Earth to space, thereby realizing enormous economies of scale. “The satellite-based Starlink communication system, also from SpaceX, enables global scaling and is therefore highly profitable,” emphasizes Rapp. Such successes are an indication of how terrestrial business models could be disrupted or replaced by space-based operations in the future. “Outsourcing AI data centers to space is also conceivable in the medium term, but seems speculative for now,” says Rapp.  

Don't underestimate the risks and restrictions

The upcoming SpaceX IPO could serve as a key catalyst for the further development of near-Earth space. However, when assessing potential opportunities in New Space, possible risks should not be overlooked, warns the FERI Cognitive Finance Institute. For instance, the explosion of the “New Glenn” rocket from the space company Blue Origin, owned by Amazon founder Jeff Bezos, has significantly set back his ambitions in space. “The increasing number of satellites in low Earth orbit is also creating problems. As a result, space debris is growing exponentially—with the risk of uncontrolled chain reactions,” warns Rapp. Nevertheless, professional investors should actively focus on the topic of New Space and its future opportunities, concludes the FERI Cognitive Finance Institute. 

The German Cognitive Briefing „‚New Space‘: Das Weltall als Wirtschaftsraum der Zukunft“, published in April 2024 provides investors and entrepreneurs with in-depth insights into the topic and supports them in analyzing and evaluating future opportunities and risks. The analysis is available for download on this page.