Citi, McKinsey Chart Growth of Space Industry

A pair of Falcon Heavy boosters landing. Morgan Stanley emphasized the double flywheel nature of SpaceX's launch and Starlink business
A pair of Falcon Heavy boosters landing. Photo: SpaceX

Citi released a report earlier this month titled “Space: The Dawn of a New Age.” The bank’s GPS group sizes up the commercial space market and forecasts that the sector will generate $1 trillion in annual sales by 2040. 

Big, if true…the shiny trillion-dollar number would represent a 5% compound annual growth rate from $370B of revenue in 2020. Citi analysts write that today’s launch costs—$1,500 per kilogram—could shrink to ~$100/kg by 2040. Or…$300/kg in a bear case scenario and $33/kg in a bull case one. The biggest driver in reducing launch costs is reusable second rocket stages: 

Image: Citi GPS

While launch gets most of the headlines—and is undoubtedly eliminating barriers of entry in space—the satellite sector still dominates the market, in terms of value. Satellites make up 70+% of today’s space market. Citi analysts envision satellites growing to $697B by 2040, or roughly 69% of the total space industry. 

  • Over the next decade and a half, internet broadband and space-as-a-service applications should siphon away market share from traditional use cases like video broadcasting. 
  • Future segments, such as space-based solar power, orbital logistics, and Moon/asteroid mining, could kick in ~$100B in annual sales by 2040. 

But…Forward-looking space economy research is highly speculative, hinging on extrapolation and plenty of if-then statements. In a report published last week, management consultant McKinsey highlights the wide divergence in forecasts about long-term growth of the space economy: 

Image: McKinsey

Snapshots in time: To level-set, the US space economy in 2019 accounted for $125B+ in real GDP output (or .6% of total US GDP) and 355,000+ private sector jobs, per BEA data. Usefully, McKinsey aggregated some other key stats in its report: 

  • The global space economy hit a new high of ~$447 billion in 2020. 
  • More than $12B in private funding is flowing into the sector annually. 
  • Around 70 countries have their own space agency.
  • Roughly 4,850 satellites are operational on-orbit and ~1,740 small satellites are launched each year.
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