Is The International Space Station a Good Investment?
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Over the years we’ve heard the press make the occasional mention about space stations and we have to admit, we were really uninformed about space stations in general, in particular the “International Space Station” (or ISS). Firstly, there isn’t just one space station orbiting around our planet. There are actually a total of three space stations in low-orbit right now. Even more remarkable is that mankind has actually had quite a few space stations orbiting our planet over time as seen below:
The space station that has attracted the most attention out of all of these is the International Space Station or ISS. 16 nations were involved in the construction of the ISS which was completed in 1998. Even though the ISS can only house 7 astronauts at a time, 224 people from 18 countries have visited it so far. Being the third brightest object in that night sky after the moon and Venus, the ISS is pretty big. The pressurized volume of the ISS is about the same as a Boeing 747, though the entire space station takes up a space which is about the size of a football field (or soccer pitch) as seen below.
While it didn’t exactly make the front page of our nation’s great newspapers, NASA stated in a press conference a few months ago that they intended to offload the ISS to a commercial operator around the mid-2020s with the following statement:
Ultimately, our desire is to hand the space station over to either a commercial entity or some other commercial capability so that research can continue in low-earth orbit…
Queue the “For Sale: One slightly used space station with great views of Central Park” headlines, but we’re not entirely convinced that NASA actually intends to sell ISS. Give it away yes, but sell it? Doesn’t seem likely. The best way to see this is through the lens of a potential buyer.
As a buyer, one of the first things you might ask is how much can I buy a new one for? As it turns out, the ISS was the single most expensive object ever built at a price tag of $120 billion. Part of the reason is because it took 136 different space flights just to put the thing together. While the technology used in the ISS is approaching 20 years old now, you can still bet it would take at least half that amount to build something similar.
The second question you might ask is, why are you selling it? There are a few reasons for NASA wanting to sell the ISS. Firstly, funding is expected to run out by 2024. While the ISS was expected to be decommissioned in 2016, President Obama decided to extend funding through 2024 so that the space station can be used to help prepare for a manned mission to Mars. Secondly, that manned mission to Mars is what NASA expects to switch their focus to and they need all their resources to do it. The ISS is not cheap to operate and NASA expects it to cost $3-4 billion a year to maintain. A cost breakdown can be seen below:
So who might actually buy the ISS? We’re probably all thinking the same thing right now. Elon Musk, one of the most audacious business men on our planet who wants to see people living on Mars, most certainly would be a likely buyer. Given that his company SpaceX is already running supplies up to the ISS with his reusable rockets since 2012, it means that he already has an ongoing relationship with NASA and that this thought has probably crossed his mind before. In 2017, Boeing and SpaceX will become the first commercial companies to deliver NASA astronauts to the ISS. However the problem isn’t just going to be a high price tag. Even if NASA gave the ISS away to Elon Musk, he’d still have to deal with the $4 billion a year maintenance bill. Tesla is barely clearing $4 billion a year in revenues, so where is this money going to come from?
The ISS is not a good investment if by acquiring it you need to burn $4 billion a year in cash just to keep it operational, not to mention the fact that it was only designed and tested for a 15-year life span. NASA admits that the solar arrays on the ISS are degrading faster than expected and that the $3-4 billion a year estimates are “overly optimistic”. People aren’t exactly queuing up to pay for conducting research in the ISS. Sure, there’s the whole “space tourism” component, but most of the costs for space tourism would be the round trip flights to get there and back as opposed to the cost of spending a night or two in the station.
Conclusion
One option might be to scrap a great deal of the older components and turn what’s left into a more modern space station that is cheaper to maintain and operate. There are other companies right now looking at building expandable space station modules which would certainly be a whole lot cheaper to deploy. Elon Musk seems to like solving problems from the ground up so it’s not likely he would be keen to inherit someone else’s legacy technology problems. The biggest problem NASA might have when trying to sell the ISS is finding someone who’s willing to pay money for it.
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excellent technology, indeed the world has taken a good step toward space technology for the benefits of mankind,move forward and obtain if possible cheaper prices in term of the costs to deliver all the satelites , thanks
Amir Sandhu
Cheers for the comment Amir. For retail investors, not a lot of opportunity for investing in stocks that have pure-play exposure to the space theme.