SpaceX continues to grab all the headlines, but if you check your rearview mirror, you’ll see that Blue Origin is catching up.
Gayle King and Katy Perry take historic flight to space
Blue Origin’s New Shepard spacecraft will historically carry an all-female crew into space, including Katy Perry and Gayle King.
Amazon.com is worth $2.4 trillion, generates $70.6 billion in profit on annual revenue of $670 billion, according to data from S&P Global Market Intelligence. (NASDAQ:AMZN) It is the fifth largest company in the United States by market capitalization and the absolute largest consumer discretionary company.
Amazon is so big, so fast growing, and has such a large technology component to its business that it has a place among the so-called “Magnificent 7” technology stocks.
But did you know there’s another company you could invest in soon (also founded by business development genius Jeff Bezos) that could potentially make you even more money than Amazon.com?
That’s true. Bezos himself says his new space company, Blue Origin, will one day be bigger than Amazon, valued at more than $2.4 trillion.
Amazon founder has a rocket dream
washington post Space reporter Christian Davenport reveals Bezos’ long-term plans for Blue Origin in a new book. Rocket dreams: Inside Musk, Bezos, and the new multitrillion-dollar space racepublished last month by Penguin Random House’s Crown Publishing Group. Over 323 pages, Davenport tells how the competing missions between SpaceX (which aims to colonize Mars) and Blue Origin, which wants to “build a path to space” more locally (i.e. between the Earth and the Moon), are pushing both private companies to ever greater heights, both figuratively and literally.
How Blue Origin can surpass Amazon
Founded in 2000, two years before Elon Musk founded SpaceX, Blue Origin started small and slow. In fact, you probably didn’t even know Blue Origin existed for the first 15 years of its existence. It was in 2015 that the company conducted its first space flight, a suborbital test of a small, unmanned New Shepard rocket. However, later that year, New Shepard successfully launched and returned to Earth. That was a month before SpaceX accomplished the same feat with its Falcon 9 (orbital-class) rocket.
like blue step by step As the motto (one step at a time, one furiously) suggests, Blue Origin is making steady progress by following in the footsteps of SpaceX.
You may remember that 2015 was also the first year that investors started seriously thinking about SpaceX as a potential investment. In 2015, Elon Musk announced plans to build a constellation of broadband internet satellites. This concept later became Starlink. To get his idea off the ground, SpaceX raised $1 billion in investment from Alphabet and Fidelity, which valued the space company at $10 billion.
Ten years later, SpaceX is worth $400 billion. That’s a 40x increase in just 10 years.
Is Blue Origin worthy of SpaceX-sized recognition?
It’s difficult to assess the value of Blue Origin. SpaceX has conducted multiple stock sales in the private markets, the details of which are regularly leaked, but Blue Origin is almost entirely funded by founder Jeff Bezos, who reportedly spends at least $2 billion a year to keep the company afloat. Still, various analysts who have tried to lower Blue Origin’s valuation have estimated that Blue Origin could be worth between $50 billion and $100 billion.
So what is 40 times $50 billion to $100 billion? That’s correct. 2 trillion dollars minimum.
And it could potentially reach $4 trillion.
How to go from $50 billion to $4 trillion (hint: you need a map)
Ask Blue Origin executives and they’ll deny it, but Blue wants to follow in SpaceX’s footsteps in more ways than just valuations. “SpaceX has shown how commercial space companies can make money and set the standard for the resurgence of Blue Origin,” Davenport argues, proving that “the commercial space industry is real.”
Much of SpaceX’s success was due to Elon Musk’s decision to bid early on government contracts to resupply the International Space Station (ISS) and, later, to “fly American astronauts back to the ISS from American soil,” as former NASA Administrator Jim Bridenstine famously put it. These contracts served as government seed capital for SpaceX, giving it the resources it needed to develop a better version of the Falcon 9, a supersized Falcon Heavy rocket, Starlink, and Starship.
In contrast, Blue Origin has declined to bid on either of these two large contracts (known as Commercial Resupply and Commercial Crew, respectively), and as a result has fallen further and further behind SpaceX. The company only launched its first orbital-class rocket, New Glenn, this year, and also orbited the first few Kuipersat internet satellites. As a result, Blue Origin fell years behind SpaceX in terms of launch pace, satellite volume, and market capitalization.
“Elon’s real superpower is getting government funding,” Bezos reportedly told executives. Going forward, Blue Origin plans to imitate the same strategy. “Going forward, we will pursue everything SpaceX bids.”
Will this strategy succeed in making Blue Origin “bigger than Amazon”? Only time will tell. But at least Blue Origin has identified a strategy to compete that has proven successful for its biggest rivals. With Blue Origin winning contracts for national security startups, the lunar lander, and even the space station, SpaceX is finally able to compete to some degree in America’s space race.
Rich Smith has no position in any stocks mentioned. The Motley Fool has positions in and recommends Alphabet and Amazon. The Motley Fool has a disclosure policy.
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