The era of cheap money is gone and that could mean tough times ahead for the space industry.
Eric Berger, senior space editor at Ars Technica, told Yahoo Finance Live that the space startups are at a very dangerous time because they have been living with low interest rates for a long time.
Burger, who is also author of Liftoff: Elon Musk and the Desperate Early Days That Launched Space, said that now we see capital availability dry up and it's more expensive to borrow and raise funding.
It is part of the problem facing Virgin Orbit VORB The Long Beach, California based satellite launch startup recently filed for Chapter 11 after failing to secure funding.
Berger said that a lot of these companies, including Virgin Orbit, were still pretty far away from delivering profits or positive cash flow. It becomes more difficult to convince investors to part with money when you have 675 employees and are launching two or three rockets a year. NEWQUAY, ENGLAND - JANUARY 09: A model of the LauncherOne rocket as Cosmic Girl, a Boeing 747-400 aircraft, prepares to take off at Cornwall Airport Newquay on January 9, 2023 in Newquay, United Kingdom. Virgin Orbit launches its LauncherOne rocket from the spaceport in Cornwall, marking the first orbital launch from the UK. The mission was named Start Me Up after the Rolling Stones hit. The Virgin Orbit was facing stiff completion from SpaceX, the industry powerhouse founded by billionaire Elon Musk.
Berger said that they SpaceX can fly much more frequently and at a lower cost than all their competitors in the United States and abroad.
Industry watchers expect SpaceX to eventually spin out of its satellite internet operation, Starlink. Berger said that the rest of the company is unlikely to go public.
Berger said that the long term vision of SpaceX was to settle Mars, as crazy as that sounds.
There is not much profit in that, so having to answer to shareholders is not something Musk wants to do with SpaceX, he said.