August SpaceX Investor Intelligence
OTVs, International Drama, Starlink D2C Challenges, and more!
Good morning, investors, partners, and friends. Today’s edition marks our third release since SpaceX Investor Intelligence’s inception.
We continue to refine our content and analysis to provide valuable insights tailored for SpaceX investors and Mach33 LPs. Your feedback has been instrumental in shaping this newsletter into a strategic resource. We welcome your thoughts and suggestions—feel free to reply directly to this email.
Looking ahead, next month's edition will take the shape of an in-depth quarterly report, offering detailed financial analysis, modeling, and bespoke insights into SpaceX. These comprehensive reports will be released in the final month of each quarter as part of our SpaceX Investor Intelligence subscription.
August has been a busy month for SpaceX so let's dive in—happy reading!
In this release, we’re exploring…
🚀📦 Starship and OTVs: The Future of Space Delivery
📡📲 Starlink's D2C & FCC Regulatory Challenges
👨🏽⚖️🌍 International Drama & Developments in The Satellite Internet Market
KPI Dashboard
Orbital Transfer Vehicles (OTVs) and Starship: A Match Made in Heaven?
Think of Starship as the interstellar equivalent of an 18-wheeler semi-truck. Great for hauling cargo over long distances, but not so suitable for dropping each package off at its final destination. On Earth, this is why we have last-mile delivery networks: to get packages to your doorstep. In the post-Starship era, we expect orbital transportation networks to develop in a similar fashion.
Just as 18-wheelers aren't designed for navigating narrow city streets or making door-to-door deliveries, Starship faces similar limitations in precise orbital placements. Enter Orbital Transfer Vehicles (OTVs), the space industry's answer to terrestrial last-mile delivery services. (Note: OTVs are also commonly known as space tugs.)
The upshot: SpaceX's Starship will increase each launch capacity by over 500% compared to Falcon 9 , further dropping the cost of space access by another order of magnitude. There is a trade-off though: although cheaper, the vehicle will offer a somewhat inflexible method of space transportation. While Starship excels at hauling large payloads over long distances, it faces limitations in achieving specific orbital placements efficiently. This is where Orbital Transfer Vehicles (OTVs) come into play, addressing the growing need for more precise orbital insertions. The diverse range of spacecraft classes and satellite missions requires such precision, and OTVs are uniquely positioned to meet these demands.
The Crucial Role of OTVs
Traditionally, after a rocket drop-off, satellite operators must raise/transfer from their initial orbit to the operational one themselves, requiring 50-70% of their fuel budget just to get the mission started. This leaves limited fuel for the mission and its requirements (station-keeping, maneuvering, etc). The opportunity cost of orbit raising/transfer could be measured in the millions or tens of millions, depending on the spacecraft and its mission.
The pitch for an OTV is that it takes you from your drop-off orbit to your operational one. Therefore, the OTV’s value proposition to a satellite operator is pretty clear-cut:
Trade an upfront cost for a longer mission lifetime (assuming your satellite won’t experience any anomalies or (sub)system failures). Longer mission lifetimes = greater future cash flows and superior unit economics.
In practice, this is how it may look: if you hire an OTV and conserve fuel you’d otherwise need for an orbital transfer, you add a relatively small fixed fee to the total mission cost, but effectively double operational lifespan, reducing amortized costs by up to 50%.
OTVs fundamentally alter the equation, enabling reduced satellite mass, extended revenue-generating lifespans, and increased payload capacity (with space/mass savings reallocated to mission-specific equipment).
Impact on Satellite Design: OTVs influence not just fuel efficiency but also the overall SWaP (Size, Weight, and Power) design considerations for satellites. Two key concepts are crucial to understanding this balance:
Delta-V: the total change in velocity a spacecraft can achieve with its available propellant, this is a critical measure of a vehicle’s ability to change its orbit or trajectory.
Specific impulse (Isp): a measure of how efficiently a propulsion system uses propellant, this is analogous to fuel economy in automobiles.
Spacecraft designers must often choose between high-thrust (rapid acceleration, less fuel-efficient, excel at escaping Earth’s gravity/making quick orbital changes) and high-efficiency (excellent fuel economy but lower thrust, requiring longer burn times for orbital changes).
Electric Propulsion (EP) and OTVs: Electric propulsion (high-efficiency) has overtaken chemical propulsion (high-thrust) as the dominant propulsion paradigm for modern satellites due to high Isp. But EP is power-intensive, requiring significant onboard power generation and storage. By delegating orbital transfers to OTVs, satellite designers can increase both performance and cost efficiencies in the following ways:
Optimizing propellent budgets and power efficiency:
By reducing the need for long-duration orbital transfers, OTVs enable satellites to carry smaller EP systems.
Smaller EP systems reduce the demand for large solar panels and batteries.
This, in turn, lightens the satellite and frees up space for additional payloads or instruments.
Making mission planning tweaks:
Even within EP there are technology tradeoffs to pick from (e.g. Hall vs. Gridded Ion thrusters). Satellites with OTV support can prioritize more efficient EP systems, focusing on flexibility rather than raw thrust.
This allows for more sophisticated mission profiles, including extended mission lifetimes and more complex maneuvers.
Longer, more capable missions, without the overhead of massive onboard propulsion and power generation systems, translates directly to the operator’s bottom line.
Key Use Cases for OTVs:
LEO Constellations: OTVs could become an alternative for orbital placements within large constellations, especially as satellites start increasing in size. With OTVs hauling them in batches, these satellites can be designed with reduced propulsion and power systems, optimizing their efficiency and longevity.
GEO Satellite Deployment: GEO satellites, which typically require substantial propulsion and power systems to reach and maintain their orbits, can now be designed with smaller, less power-intensive EP units.
Specialized LEO Orbits: Missions requiring unique orbits, such as sun-synchronous (SSO) corridors for Earth observation, benefit from reduced power and propulsion needs, allowing for more advanced scientific instruments or communication systems.
Space Infrastructure Deployment: As space stations and other larger infrastructure becomes more common, OTVs will be essential for assembling and moving components into the correct orbits.
Cargo/In-Situ-Resource-Utilization: OTVs can be optimized for heavy-load transport of space goods and materials.
Like PB&J, OTVs pair perfectly with “gas stations in space.” Companies like Orbit Fab are developing orbital refuelling depots, which will extend the range and lifespan of both satellites and OTVs (particularly as it relates to more exquisite vehicles in higher orbits). This is a critical piece of infrastructure for the emergency space economy, ensuring that OTVs can operate efficiently over longer periods and distances.
OTV Market Overview
OTVs have overtaken launch services as one of the most, if not the most, saturated sectors of the space economy.
By our count, over 120 companies are aspiring to build–or have built–an OTV (there are 13 in Europe alone). A small fraction of this wide field have OTVs in an operational stage. Here are several players at the forefront of developing OTVs:
Exotrail’s "Spacevan" OTV offers last-mile delivery services and is set to extend its capabilities to GEO by 2026.
D-Orbit’s “ION Satellite Carrier provides OTV services that have been used in various commercial missions, proving the viability of this technology.
Momentus Space ($MNTS), known for its Vigoride spacecraft, effectively uses the vehicle as a ferry to move payloads to their final orbits.
Impulse Space's Mira OTV has already demonstrated significant success in maneuverability and payload deployment. Mira is designed for operations in LEO, MEO, GEO, and even cislunar space, showcasing its high delta-V and versatility.
Portal Space's (M33 PortCo) Supernova introduces a novel solar-thermal propulsion system, offering ultra-high mobility and rapid transfer capabilities from LEO to GEO and beyond. The Supernova's design caters to both commercial and military needs, providing responsive space operations and enhanced maneuverability
Stoke Space's reusable second stage, once operational, is expected to function as an advanced OTV, providing precise orbital transfers and even offering downmass capabilities.
Our Takeaway
Starship pours rocket fuel on the business case for OTVs. They will be critical to a more flexible and expansive space ecosystem once Starship drastically improves launch economics and upmass capacity. OTVs’ role in reducing the demands on propulsion and power generation systems will unlock new possibilities for space asset design and deployment, establishing them as crucial infrastructure in the future of the space economy.
News Roundup
August 20
FCC Grants Starlink Constellation Upgrade
The FCC has granted SpaceX permission to modify its license for the first-gen Starlink constellation, allowing the company to start upgrading its satellite hardware. This modification includes enhancing beam-forming and digital processing capabilities to enable narrower beam transmission, along with updates to the orbital debris mitigation plan to accommodate larger, Starship-enabled satellites. Narrower beams are expected to provide more targeted and robust coverage, which could lead to increased signal strength and better bandwidth for users all while reducing interference with competitor networks. This should allow Starlink to handle more users with enhanced performance and reliability.
August 24
Starliner
NASA leadership Starliner conference on Aug. 24
Boeing's Starliner is at a critical juncture following multiple thruster failures and software issues during its June mission. NASA has decided the spacecraft will return to Earth uncrewed, citing safety concerns over thruster malfunctions and helium leaks. This uncrewed return is scheduled for no earlier than September 6, 2024. Astronauts Wilmore and Williams, who were initially meant to return on Starliner, will now stay on the ISS longer and return on SpaceX's Crew Dragon during the Crew-9 mission, launching as early as September 24, 2024, with their return to Earth delayed until February 2025. This situation further solidifies SpaceX's role as NASA’s primary commercial partner, despite potential adjustments to the Crew-9 mission. For Boeing, however, the ongoing Starliner problems cast doubt on its future as a Commercial Crew provider, especially with the ISS set to retire in 2030. The company's broader spaceflight challenges, including significant Starliner losses and setbacks in other projects, may lead Boeing to consider spinning off its commercial space division or exiting the sector altogether.
+ While we’re here…Sierra Space has emerged as the most-likely suitor to acquire ULA, of which Boeing owns 50%. And after we’d wrapped up our draft of this section, we saw TechCrunch report that CEO Jason Kim has departed Millennium Space Systems, a smallsat manufacturer and Boeing subsidiary, to take the chief executive role at Firefly.
August 29
Starlink Stands Firm Amid Regulatory Challenges in Brazil
The ongoing conflict between Elon Musk’s companies, X Corp (formerly Twitter) and SpaceX/Starlink, and Brazilian Supreme Court Justice Alexandre de Moraes highlights some challenges but also Musk’s commitment to maintaining service despite regulatory hurdles. The dispute, focused on content moderation and legal representation issues with X Corp, has had a spillover effect:
Justice Moraes ordered the freezing of Starlink’s financial assets in Brazil.
In response, Musk committed to maintaining Starlink's service for over 250,000 customers in Brazil, even offering it for free if necessary.
With an average monthly Starlink subscription of ~$50 in Brazil, this equates to a $12M monthly revenue loss for SpaceX (~1% of its estimated monthly revenue).
This situation underscores a key concern for SpaceX investors: the risks linked to Musk’s ownership of multiple companies. It takes an especially authoritarian approach to target Starlink due to its mere association with Musk and X Corp, suggesting these scenarios are more exceptional than common. Still, Starlink’s resilience and adaptability in facing such regulatory issues are noteworthy: it’s difficult for governments to intervene when the infrastructure is in space!
For investors, this conflict serves as a reminder of the complex interplay between global business operations and state regulations. It also demonstrates Starlink’s ability to navigate these complexities while maintaining service commitments. How this scenario unfolds will offer valuable insights into future interactions between SpaceX and countries with stricter state regulators.
August 12
Fram2
Crew Dragon Endurance during Crew-3 mission in 2022
SpaceX announced "Fram2," the first human spaceflight over Earth's poles, led by bitcoin mining entrepreneur Chun Wang. Set to launch potentially before the end of the year, this mission marks SpaceX's third free-flying Crew Dragon journey, suggesting substantial pre-launch training and planning. This development demonstrates SpaceX’s ability to attract ultra-high-net-worth individuals for bespoke missions, signaling new revenue opportunities and showcasing Crew Dragon’s versatility. The polar orbit, a unique trajectory requiring increased fuel, positions SpaceX to command premium pricing. The timing also underscores SpaceX's capacity to quickly execute private spaceflights, which could drive up demand from government and commercial clients for specialized orbits. This trend toward specialized, higher-margin missions could counteract some of the expected commoditization in the low Earth orbit tourism market. Monitoring pricing and future bookings for similar missions will be crucial, as they could significantly influence SpaceX's revenue projections in its human spaceflight division.
August 28 - 30
Brief Falcon 9 Grounding
The Falcon 9 rocket was recently grounded following a landing incident in which the first stage booster toppled over after successfully touching down on the A Shortfall of Gravitas droneship. This mishap has led the FAA to temporarily ground Falcon 9 launches (again!) to ensure public safety and investigate the cause. SpaceX's teams have been analyzing flight data to understand what went wrong. Notably, this was the booster's 23rd mission. According to observers on X, a distinctive blue and green flame was noticed during landing, suggesting a possible failure in the landing leg hydraulic system, which uses MIL-H-5606 hydraulic fluid known to burn with these colors. If true, this failure could have compromised the stability of the booster, causing it to tip over. Falcon 9 was back to launching payloads within 48 hours so business impact was minimal.
August 27
Starlink to Offer Free Emergency Phone Services
Elon has announced that SpaceX’s Starlink will offer free emergency services access via mobile phones for people in distress, pending approval by individual country governments. This decision ensures that individuals won't face life-threatening situations due to an inability to pay for emergency connectivity. The move has sparked discussion about its implications for SpaceX's direct-to-consumer (D2C) monetization strategy, raising questions about how free emergency access might affect the overall market for satellite-based mobile services. Some observers see this initiative as a strategic play to encourage regulatory bodies, like the FCC, to modernize their bandwidth regulations, emphasizing that life-saving technology should not be hindered by outdated policies. By positioning Starlink as a critical provider of emergency connectivity, SpaceX not only underscores the vital role of satellite communications in public safety and disaster response worldwide but also enhances its appeal, potentially capturing more market share and gaining traction in markets where traditional cellular service is limited or unreliable.
August 21
With $15, You Can Rent a Starlink Kit Monthly in Kenya
Starlink has launched its first financing plan to enhance affordability in developing countries, beginning with Kenya. The new option allows customers to rent the Starlink internet kit for $15.15 per month, making the service more accessible. This initiative targets regions where traditional broadband infrastructure is limited or non-existent, positioning Starlink as a vital solution for connecting those who previously had no viable internet options. By providing satellite internet to underserved populations, Starlink not only expands its reach but also unlocks new opportunities for digital inclusion, significantly expanding the total addressable market (TAM) for internet services globally.
August 5
$299 $499 for the Starlink Kit
One of our team members received a limited-time offer to purchase a Starlink Kit at nearly half off—$299 instead of the usual $499 (a 40% discount). This offer is valid until October 5th for both Residential and Roam users.
SpaceX is pushing for market dominance by aggressively challenging traditional ISPs and other satellite services, especially in underserved rural and remote areas where Starlink excels. This move also shows SpaceX’s growing sophistication in direct-to-consumer marketing, employing personalized automated emails and creating urgency with limited-time offers to attract price-sensitive, high-intent buyers. By highlighting benefits such as fast ordering, impressive download speeds of up to 200+ Mbps, and a risk-free experience with 30-day returns, no long-term contracts, and easy cancellations, SpaceX aims to lower barriers for new customers.
This approach may indicate falling costs due to manufacturing scale and improving profitability.
PS: If you’re interested in buying a Starlink Kit at a 40% discount, click here. Available to U.S. customers!
Takes
What we are reading, watching, or hearing – and how we think about it.
August 25
FCC’s PFD Limit Challenges SpaceX and T-Mobile’s D2C Ambitions
The Federal Communications Commission (FCC) has hinted at a short-term setback to T-Mobile and SpaceX's plans for satellite-based mobile services by implying it will maintain its power flux-density (PFD) limit, which is intended to limit cross-network interference. SpaceX has recently sought a ninefold increase in these limits to enhance its direct-to-cellular (D2C) satellite coverage, but the FCC, supported by competitors to T-Mobile, such as AT&T and Verizon, cited concerns over potential interference with existing terrestrial networks. AT&T and Verizon have partnered with AST SpaceMobile, a competitor to Starlink which has developed compliant D2C satellite technology featuring superior directivity and lower interference. In contrast, T-Mobile's partnership with Starlink now faces regulatory hurdles. Critics argue that SpaceX is attempting to bypass the very rules they helped create, although this is likely inferred from SpaceX’s past regulatory engagement with the FCC, rather than based on any evidence of SpaceX participating in creating the regulations themselves. The same critics are pointing at AST SpaceMobile’s current D2C technological advantage, which is undeniable at this current time. As it stands, AST Spacemobile’s satellite technology can, in principle, deliver higher bandwidth with less interference than current Starlink D2C sats due to their larger size and patented signal tapering. The market has clearly caught onto this given the partnerships with large mobile network operators (MNOs). Principles are one thing and execution is another; we await AST to launch its first batch of commercial satellites later this September.
As mentioned in the news roundup above, the FCC has recently granted SpaceX permission to upgrade its ‘first-generation’ Starlink constellation with ‘second-generation’ satellites, expected to significantly narrow beam-width and reduce interference. Combined with SpaceX’s economies of scale, vertical integration, rapid prototyping ethos, and an imminent Starship that can launch much larger satellites, M33 believes Starlink could overtake ASTS’s beam-forming capabilities faster than the market is anticipating, especially as both D2C networks scale. Importantly, AST SpaceMobile’s partnership contracts with MNOs are non-exclusive. We will discuss the competitive dynamic between Starlink and AST SpaceMobile in more depth in our upcoming SpaceX Quarterly report.
Worth noting that, as of September 3rd, the FCC has not yet explicitly approved or denied SpaceX’s waiver to relax the PFD limit. Rather, they simply restated the limit in a recent report. We eagerly await the FCC’s decision as it will significantly impact the the first innings of the D2C market.
SpaceX’s Environmental Opportunity
In our July edition, we had a take about a New York Times investigation into SpaceX's environmental impact in South Texas. A reader who lived in the Rio Grande Valley for a decade wrote in with some thoughtful feedback, noting there are legitimate environmental concerns at play that deserve careful consideration. He wrote that SpaceX could play a positive role in supporting local habitat restoration plans, and even help potentially transform the area "into a tropical oasis" if plans are executed thoughtfully. We appreciate this valuable local perspective - and love getting your comments, viewpoints, and insights on what we're putting out. Keep the replies rolling in!
Eye Candy
Raptor 3
SpaceX lifted the wraps on Raptor 3 – the engine’s latest iteration represents a substantial advancement in rocket technology, with a 25% thrust increase over V2 to 280 metric tons, while maintaining a 350-second specific impulse (a measurement of how efficiently a rocket engine uses fuel). SpaceX ditched the traditional nozzle extension, slimming down the engine's waistline and its manufacturing complexity. Elon's "no part is the best part" mantra is in full effect, with additive manufacturing integrating formerly discrete components. (Elon also said that “SpaceX has the most advanced 3D metal printing technology in the world.”)
M33 News & Updates
M33 PortCo Portal Space awarded $45M Strategic Funding Increase (STRATFI) by US Air Force
“This award not only provides vital financial support,” says CEO Jeff Thornburg, “but also underscores the strategic importance and interest from program offices in accelerating our development and advancing national capabilities.”
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