The Next Era of the Space Economy

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Humans have not returned to the moon in 50 years, and the reason is not that engineering has become impossible. Once the moon race ended, no one had a strong enough reason to go back. That observation explains more about what is coming next in space than any rocket spec.

Apollo worked because of a unique political moment

The Apollo program is typically treated as a template for what the government can accomplish. At its peak, the program consumed 5% of the federal budget, employed 400,000 people, and engaged 20,000 companies. The political logic was straightforward. The Soviet Union had reached space first, and the United States couldn’t afford to be second.

Once the American flag was on the moon, that logic dissolved. The US went back five more times within three years, then stopped, and has not been back. The reason had nothing to do with technology; it was the disappearance of the political reason.

How One Incentive Shift Changed the Cost of Space

The most consequential development in space over the last 20 years is invisible to anyone watching only the rocket footage. It’s a change in how the government buys from industry.

For 40 years, the standard form was cost-plus contracts. Contractors were paid a percentage on top of whatever it cost to build the rocket, and the bigger the costs, the bigger the profit. One former industry executive described his company's most valuable product as its overhead.

After losing its own ability to put astronauts in orbit, NASA tried something different. It contracted SpaceX to deliver a defined service at a fixed price. How the rocket was built, what it cost, and what margin SpaceX earned became the contractor's problem rather than the agency's. That single change in contract design shifted the incentive from cost growth to cost reduction, and launch costs fell by roughly 95% over the next decade.

Reusability followed directly from the new structure. NASA had attempted reusable rockets twice without success. The Falcon 9, designed under a fixed-price model where every dollar saved became a dollar of profit, became the first reusable orbital rocket. A single Falcon 9 booster has now flown 34 times. Blue Origin reached a similar milestone roughly 10 years later. No state-owned space agency has matched either.

SpaceX Has Become the Center of the New Space Economy

The numbers describing the current state of space are easier to absorb once you stop putting NASA at the center of the mental model. Last year, there were 324 orbital launches worldwide. SpaceX, a single private company with a highly anticipated initial public offering, conducted 165 of them. Of the roughly 15,000 active satellites currently in orbit, around 10,000 belong to that same company.

If SpaceX were counted as a country, it would rank first in launches, ahead of China at 88. All of Europe combined had eight.

That concentration is also a dependency. The bull case for the new space economy is largely a bull case for one company and a handful of its competitors.

Space Capitalism Needs Ownership Rules

The next stage of the space economy includes Mars settlement, asteroid mining, and orbital infrastructure beyond satellites. It runs into a constraint that the engineers cannot solve. The 1967 Outer Space Treaty prohibited nations from claiming sovereignty over celestial bodies. It said nothing about private actors, because in 1967, a private actor reaching another planet was not contemplated.

Without a property regime, the financing for large-scale space projects breaks down. No private company will spend tens of billions of dollars developing infrastructure on a celestial body whose ownership is undefined.

A more plausible solution is something close to historical homesteading. If a private entity can reach a piece of celestial territory and develop it, they hold a defensible claim to a defined portion. The claim is then taken to public markets in a structure resembling a real estate investment trust, which lets ordinary investors own fractions of the development.

The model financed the American settlement of land that no government effectively controlled two centuries ago. The difference today is that no government owns the celestial land in question, which simplifies the legal architecture rather than complicating it.

The Real Value of Asteroids Is Already in Space

The popular framing of asteroid mining assumes the resources come back to Earth. The economics are usually better if they don’t.

The valuable resources, including water, certain metals, and key minerals, are most useful in space, where launching them from Earth is the binding cost constraint. An asteroid that contains usable water or platinum-group metals is worth far more in orbit than its earth-delivered equivalent.

The timing is probably a 10 to 20-year story rather than a 5-year one, and arrival is gated by property rights more than by engineering. Two companies tried to build the industry in the 2010s and failed. They were not wrong about the science; they arrived before the contract structure was ready.

Space Tourism Is Following an Old Economic Pattern

A short trip on a private rocket currently costs over $300,000 for a few minutes. A flight to the International Space Station costs around $50 million. That sounds prohibitive... for now.

The historical pattern is familiar: New experiences arrive first as toys for the wealthy and become accessible only later. Aviation, the African safari, and the early automobile all followed this curve. The wealthy underwrite the cost reduction, and the broader market expands afterward.

Whether space tourism becomes meaningful over the next two or three decades depends on whether the rocket reusability curve continues to compound. There’s no obvious physical reason it would not.

How Investors Should Approach the New Space Economy

The new space economy is legit and probably under-allocated in most portfolios. It’s also unusually concentrated, dependent on a small number of irreplaceable people, and structurally exposed to legal questions that have not yet been resolved.

A reasonable posture is the one investors should have brought to early internet exposure in the late 1990s: Take the question seriously. Allocate small relative to long-term conviction. Size positions to survive a difficult middle period when expectations exceed reality for a stretch.

The most important changes are happening below the level of headlines, in contract language and treaty interpretation. Those are the kinds of changes that tend to be slow-moving and durable, and they will probably define the next 20 years of space.

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DISCLAIMER: This article is based on a conversation from Top Traders Unplugged and reflects themes, ideas, and perspectives discussed during the episode. The views expressed are those of the guest and participants in the conversation and should not be interpreted as investment advice or as the official views of Top Traders Unplugged.

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