Deep Dive: Where Will Value Accrue In The Space Economy?

“The space economy is no longer a distant or speculative theme.” - BlackRock, July 2026

In 2012, private investors put about $0.5B into space hardware. In 2025, they put in about $17B. So, why are investors pouring billions of dollars into space now? The easy answer is “because of SpaceX,” but even excluding SpaceX, space hardware investment has grown more than 30-fold since 2012.

For most of its history, the space economy relied exclusively on government money. At the height of the Moon race in 1966, NASA took 4.4% of all federal spending. Four years later, its share was 1.9%, and by 2025 it was 0.4%. But today, government spending on space is rebounding because of a new, second buyer:

The Space Force, which became its own service in December 2019, is investing heavily into space defence. By fiscal year (FY) 2023, its budget had passed NASA's, and its regular request for FY2027 is three times NASA's, before $12.1 billion of one-off extra money. Two experts we interviewed expect government spending on space, defence especially, to keep growing. “I just don't see how the defense spend on space is going to stop,” one of them said.

There are also more builders. In 2000, 32 businesses built a satellite that was launched that year. In 2025, 184 did, almost six times as many.

Why are more firms launching satellites? Partially because it got cheaper. Launch costs per kilogram fell by about 25 times from the Space Shuttle to SpaceX's Falcon 9. To see if this translates into increased investor expectations, our research team put together a basket of 10 space stocks, each given the same weight. If bought on January 2, 2024, this basket would have risen 1,123% by May 2026, twelve times its starting value.

Stock prices reflect what investors expect more than what companies earn today. So is this growth in valuations backed by lasting revenue? We read the filings of the seven companies in the basket that report who pays them. Their revenue is rising, but most of it still comes from governments: 56% in 2025, or about 60% once we count private customers that governments fund. So is this a temporary burst of government spending on a market that doesn’t really exist, or is the state only speeding up an industry that will eventually stand on its own?

To answer this question, we created a framework. Government-built industries grow in four stages. First, a government pays above cost because it must have the thing. Second, companies compete for that money; they build more, and each unit gets cheaper. Third, the price drops below what ordinary buyers will pay, and a commercial market opens. Fourth, people and factories spread into new companies. Chips ran through all four in six years. The space economy today is in the second stage: defence orders are rising and launch keeps getting cheaper. Whether it reaches the third, where buyers other than the military pay, is still open.

It can also go wrong, though. Concorde started the same way. The French and British governments paid the full development cost, about £1.134 billion for the first four aircraft. The rest of the loop never came. Only 20 were built.

In our view, this is the question that decides the industry: is defence just the first customer for space, or the permanent one? If it is the first, space follows chips.

Our Deep Dive builds the answer in five parts:

Along the way, we also cover:

Read the full deep dive below and let me know what you think in the group.

Disclosure: Virgin Galactic, in the basket, listed through Social Capital Hedosophia, a SPAC co-sponsored by Social Capital.

Deep Dive PDF below ↓