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Space is becoming investible because it is becoming operational infrastructure rather than a collection of one-off missions. Sr. Research Analyst Massimo Marolo, CFA, discusses how changes in launch, connectivity, and Earth observation are reshaping the industry.
Transcript
Kevin Murphy: Hi, I’m Kevin Murphy, managing director at Sands Capital. I’m talking today with Massimo Marolo, a senior analyst exploring future investment opportunities, including the space economy.
At Sands Capital, we look for long runway markets where durable businesses can grow through cycles. The space economy has moved higher on that list and has become more important to everyday economic activity, connectivity and navigation, weather and climate monitoring, and national security.
Massimo, thanks for joining me today.
Massimo Marolo: Thanks, Kevin. Great to be here.
Defining the Space Economy
Kevin Murphy: Before we get into the details, let’s frame the conversation a little bit. What do we really mean when we talk about investing in the space economy?
Massimo Marolo: Sure. Well, no pun intended, but it’s a big space. And most of the time, we mean the businesses that make space useful on Earth. That includes launching satellites, building them, operating them, and turning the signals that satellites produce into things that people can actually use. It also includes the ground equipment and software that connects users to those satellites.
Space is not one industry. It’s more of a supply chain, and different parts of that supply chain have different risk and return profiles.
Falling Costs Change the Equation
Kevin Murphy: The space economy is getting a lot of attention lately. But it’s not new. I’m thinking back to Sputnik, the Apollo missions, launching Katy Perry into space recently.
What makes the space economy more investible today than it has been in the past?
Massimo Marolo: So several things have changed over the last few decades. Space used to be mostly government programs. Long timelines, and custom-built systems. Now, private companies are building systems meant for lots of customers. A second shift is cost and practicality, especially in launch. SpaceX entered the industry with a different approach and demonstrated that launch could be done reliably and at a much lower cost.
"Space is becoming investible because it is becoming useful at scale.”
SpaceX was founded in 2002, and today its core businesses include launch and satellite broadband. If you consider that in the Space Shuttle era, it would cost roughly $60,000 to send one kilo of payload into orbit. Today, that figure is down to about $1,500 per kilo. SpaceX’s workhorse rocket, Falcon 9, that has a reusable booster can support more frequent launches and more predictable schedules.
The next generation of vehicles, which will aim to be fully reusable, including Starship, could bring cost down further over time, potentially into the $200 to $500 per kilogram range.
So when you contemplate costs moving that far down, an entirely new array of possibilities opens up.
A Market Entering Its Growth Phase
Kevin Murphy: How large of a market are we looking at today, and what sort of growth are you expecting?
Massimo Marolo: There’s a lot of estimates, but one reputable one from McKinsey put the global space economy at about $630 billion in 2023, and projects it could reach close to $1.8 trillion by 2035.
Another way to look at it is activity. There are about 13,000 satellites in orbit today. We estimate that could rise toward 30,000 by 2030, and potentially as high as 60,000 by 2035.
Let’s unpack that math a little bit. So we’re at 13,000 satellites in orbit today and back in 2019, we were putting about 500 satellites per year into orbit. Today, that number is closer to 3,000. If we take 3,000 per year for the next five years, that’s 15,000. That gets us very close to 30,000.
And we also assume that that 3,000 per year number will increase. And that’s why we think 60,000 by 2035 is actually quite achievable. Then you have services delivered from orbit things like connectivity and navigation, weather intelligence, Earth observation, national security, all are becoming routine inputs into commerce.
The Gateway to Space Activity
Kevin Murphy: That’s a pretty broad market and a large market as you described it. So where are you seeing demand show up first, and why do you think it’s starting there?
Massimo Marolo: First and foremost is launch.
Launch is the gateway to space, the same way railroads and automobiles were gateways to much bigger opportunities. But value does evolve, and over time, launch will give way to those areas that end up being bigger and more profitable.
The real question is what systems, components, and software will shape those next chapters.
Framing the Opportunity Set
Kevin Murphy: Ok. So again, big market, how do you organize it in a way that helps you uncover those next chapters?
Massimo Marolo: We framed the space economy as a value chain. Launch gets payload into orbit. Satellites and sensors do the work in space. Ground systems, antennas, downlinks, cloud delivery, software, and artificial intelligence (AI) turn raw signals into products customers can plug into their daily operations.
Launch is a current attention grabber. But over time, value will accrue to what launch enables.
Early Areas to Watch
Kevin Murphy: Looking ahead, where do you see yourself focusing your attention in the near term.
Massimo Marolo: One area that is already with us is connectivity.
Satellite broadband is taking up a lot of launch capacity because consumers, businesses, and governments want coverage and backup options. National security matters here, but the commercial use case is also deep and growing. What we watch is service quality. The cost to deliver the service, and whether the economics improve as network scale.
Another area is Earth observation, which also has strong relevance for defense and national security.
The market is moving from a snapshot in time to more continuous monitoring. Customers care about how quickly you can collect the data, how often you can revisit the same location, and how cleanly you can turn that raw signal into something decision-ready. AI helps make that practical.
Preparing for the Next Chapter
Kevin Murphy: At Sands Capital, we are in the differentiated insight business. I often describe it as looking around the corner. So what are people not paying enough attention to now that might be on your radar over the next few years?
Massimo Marolo: As the space economy expands beyond government and toward more commercial applications, we’re watching the enablers that can include satellite manufacturing components, ground stations and the software that delivers data into customer workflows.
We’re also watching in-orbit services, inspection, servicing, life extension, and debris mitigation. If the number of satellites keep rising, keeping orbits usable becomes an economic priority.
Why Space Matters Now
Kevin Murphy: Excellent. It’s a lot to process in this short conversation today. But what do you want clients to take away from our conversation here?
Massimo Marolo: Yes. Space is becoming investible because it is becoming useful at scale.
The opportunity set is broad from launch and satellites to ground systems and services. Today, we’re talking about launch. One day, we may be talking about data centers in space or even space manufacturing.
The companies that endure are likely to be the ones that can deliver reliability, integrate with customers, and scale as activity rises.
Kevin Murphy: Excellent. Massimo, thanks for joining me today.
For more in-depth coverage of our research in the space economy, please keep an eye out on our website sandscapital.com for upcoming publications and insights.
Disclosures:
The views expressed are the opinion of Sands Capital and are not intended as a forecast, a guarantee of future results, investment recommendations or an offer to buy or sell any securities. The views expressed were current as of the date indicated and are subject to change.
This material may contain forward-looking statements, which are subject to uncertainty and contingencies outside of Sands Capital’s control. Readers should not place undue reliance upon these forward-looking statements. There is no guarantee that Sands Capital will meet its stated goals. Past performance is not indicative of future results.
All investments are subject to market risk, including the possible loss of principal. Recent tariff announcements may add to this risk, creating additional economic uncertainty and potentially affecting the value of certain investments. Tariffs can impact various sectors differently, leading to changes in market dynamics and investment performance.
References to securities or holdings that are not currently held in any Sands Capital strategies are for illustrative purposes only.