Enhanced Space Force Initiative Accelerates Growth of United States' Tiniest Space Technology Firms
Enhanced Space Force Initiative Accelerates Growth of United States' Tiniest Space Technology Firms
Hey there, investors in the cosmic sphere! By now, you've likely heard about the Expanded Conflict Warfighter Orbital Infrastructure (ECWOI), the US Space Force's grand venture to construct a constellation of Low Earth Orbit satellites worth billions. The main objective? To track missile launches and transmit the data back to US missile defense systems for a suitable response.
But have you heard about ORBITAL ELEPHANT?
ECWOI gives birth to ORBITAL ELEPHANT
ECWOI suggests launching as many as 700 satellites in sequences – communication (transport) and tracking (observation) layers – circling the Earth. Big names like Lockheed Martin (LMT 1.95%), Northrop Grumman, L3Harris, RTX Corp, and Rocket Lab have already garnered contracts for this project.
The gloomy news, however, is this giant space endeavor is just taking off, with Tranche 1 satellites soon to be unveiled, joining the handful presently in orbit from Tranche 0. And yet, US Space Force is already contemplating expanding the project – which is where our new space alphabet comes in, ORBITAL ELEPHANT, short for Orbital Transition & Experimental Program for Advancement.
As reported by SpaceNews, US Space Force's Space Development Agency tapped 19 different space companies in late November to collaborate in ORBITAL ELEPHANT. This project aims to hasten the development of satellite technologies for integration into ECWOI, as well as carry out "test missions" to assess any new abilities offered by participants. A whopping 40 companies in total offered to perform these demonstrations, with 19 making the cut, taking up the role of "prime contractors" eligible for future collaborations within the ORBITAL ELEPHANT program.
Most don't ring a bell – but a few might. Below, I have presented a list of these companies, including a few that may be open to investment:
- Airbus U.S. Space & Defense (EADSY -0.10%)
- Apex Technology
- AST Space Mobile (ASTS -0.52%)
- Astro Digital
- Capella Space
- CesiumAstro
- Firefly Aerospace
- Geneva Technologies
- Impulse Space
- Kepler Communications
- Kuiper Government Solutions, a subsidiary of Amazon (AMZN 0.73%)
- LeoStella
- Momentus Space (a relic from the 2021 SPAC race, not exactly toeing the line)
- Muon Space
- NovaWurks
- SpaceX
- Terran Orbital, now a subsidiary of Lockheed Martin
- Turion Space
- York Space Systems
By my count, that equates to five entities on this list belonging to publicly traded companies or standing alone as public space stocks – easy acquisition for investors if they're interested. This also means that US Space Force has tapped 14 private enterprises to take part in ORBITAL ELEPHANT, 13 of which can be considered small fries, and one – SpaceX – is anything but tiny.
Mini, but mighty
So why take notice of these NewSpace infants during this ocean of titans, with far greater financial support, tuned-in for government contracts in ORBITAL ELEPHANT?
Because of mathematics, plain and simple: The larger a company, the more probable it is to land contracts – motivated by the specifics of governmental contracting. But, with that size, any contract becomes a comparative drop in the ocean, barely impacting revenues or profits significantly.
Lockheed Martin, for instance, reported a jaw-dropping $68 billion profit last year, deriving over $6.9 billion from contracts. At present profits of roughly 10%, a $40 million increase would bump up annual sales by less than 0.01% and would barely be given a second glance. (I'll elaborate on why I've chosen $40 million later on.)
In contrast, even a sliver of these funds could be a financial watershed moment for a small fish like Capella Space, which reported $12 million in revenue last year, if we rely on data from S&P Global Market Intelligence, or Muon Space, which S&P reveals has no revenue, although Muon swears it does, refusing to elaborate about its financial situation.
According to SpaceNews, each successful participant of the ORBITAL ELEPHANT tasks will be required to release two satellites within the next 12-18 months. Unfortunately, the precise contract values have yet to be disclosed, but we know that past contracts under ECWOI have averaged around $20 million per satellite – meaning anyone lucky enough to secure an ORBITAL ELEPHANT contract could expect a windfall of $40 million.
That might not constitute a significant increase for an orca like Lockheed Martin. But for many of these rising enterprises, it could mark the beginning of a road to an Initial Public Offering – at least in my financial opinion, which makes ORBITAL ELEPHANT a Space Force competition worth keeping an eye on.
Editor's note: This article has been corrected. In an earlier version, it was claimed that "as far as we know" Muon has no revenue. However, Muon has since confirmed to us that it in fact has some revenue.
Investors looking to diversify their portfolio in the field of finance might consider investing in some of the smaller companies that have been selected to participate in the ORBITAL ELEPHANT project. For instance, Capella Space, which reported $12 million in revenue last year, could potentially see a significant financial boost if they secure an ORBITAL ELEPHANT contract. Similarly, Muon Space, although its financial situation is not publicly disclosed, could also benefit significantly from this opportunity.
With each successful participant required to release two satellites within the next 12-18 months, and past contracts under ECWOI averaging around $20 million per satellite, securing an ORBITAL ELEPHANT contract could mean a financial windfall of $40 million for these companies. This could potentially pave the way for an Initial Public Offering (IPO) for many of these rising enterprises, making ORBITAL ELEPHANT a competition worth keeping an eye on for investors interested in the finance and investing sphere.