Blue Origin rocket explosion: Why does it affect its competitor SpaceX?

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With a loud bang from Blue Origin, it’s not just Bezos who is hurt.

Blue Origin’s New Glenn rocket recently exploded during an engine test at its Florida launch pad, completely destroying its only launch site. On the surface, this accident will further consolidate SpaceX’s leading position in commercial space, especially as SpaceX is about to go public. However, neither Musk nor the SpaceX team took pleasure in Blue Origin’s misfortune; instead, they expressed their condolences—there is a clear business logic behind this.

After the accident, the stock market response was intriguing. Two publicly listed rocket companies that theoretically would benefit from Blue Origin’s setback—Rocket Lab and Firefly Aerospace—closed down 3% and 6% respectively that day. This trend reminds the market that any aerospace accident will reignite investor caution toward the entire industry’s risks, not just bring pressure solely on the party involved in the accident.

Short-term benefits, long-term concerns

The short-term benefits to SpaceX from the explosion are obvious. According to The Information, the accident destroyed Blue Origin New Glenn’s only launch site, and rebuilding is estimated to take about a year and cost tens of millions or even hundreds of millions of dollars. This means New Glenn is unlikely to blast off again until at least next spring.

Previously, NASA planned for future lunar exploration missions to share launch duties between SpaceX and Blue Origin. The long-term grounding of New Glenn will almost certainly force NASA to rely more heavily on SpaceX, or to delay related plans while waiting for Blue Origin to catch up.

In addition, the delay of New Glenn will directly ease the competitive pressure faced by Starlink. Originally, New Glenn’s next launch mission was to send 48 satellites into orbit, serving Amazon’s not-yet-launched Starlink competitor Leo; afterwards, it was also going to launch more satellites for another Starlink competitor, AST SpaceMobile. Last year, Starlink contributed the majority of SpaceX’s revenue; setbacks in the launch plans of these competitors will undoubtedly relieve immediate pressure for SpaceX.

Financing prospects clouded

This explosion may also impact Blue Origin’s external financing plans. To date, Bezos has been Blue Origin’s sole investor.

According to the UK’s Financial Times in March this year, Blue Origin was considering bringing in outside capital for the first time, to accelerate business expansion. However, a launchpad explosion will no doubt increase potential investors’ concerns, making the financing process more complicated.

The deeper reason for SpaceX’s restraint

The long-standing public rivalry and mutual mockery between Musk and Bezos is well known, but this time, Musk has chosen silence and restraint. The reason is not hard to understand.

In 2016, a SpaceX Falcon 9 rocket also exploded during an engine test at its Florida launch pad, causing the site to be shut down for 15 months. SpaceX knows well the agony of such dark moments.

More importantly, SpaceX is on the eve of going public. Once it becomes a public company, any major future flight failure—which, given SpaceX’s ambitious plans, is almost guaranteed—will be subject to public market scrutiny and assessment by shareholders. At that time, Musk will need the market to show him the same patience and lenience. Kicking a competitor when they’re down now would be planting the seeds of trouble for himself in the future.

The iron rule of aerospace: Today’s bystander can become tomorrow’s party involved at any moment.

Risk Warning and DisclaimerThe market comes with risks; investments should be made cautiously. This article does not constitute personal investment advice, nor does it take into account the particular investment objectives, financial situations, or needs of any individual user. Users should consider whether any opinions, views, or conclusions in this article fit their specific circumstances. You are responsible for your own investment decisions. ```