Chanin: SPCX Starship Shows "Tremendous Opportunity" For AI, Space Infrastructure

Alex Caulfields (0:00)

Welcome back to Next Street Investing, I'm Alex Caulfields. Welcome in Andrew Chanin, the CEO and co-founder of Procure Asset Management here to discuss some SpaceX.

Andrew, big milestone reached. It took them a few tries, but it seems that they, with HICUP, as my understanding as well, did achieve something pretty important here. I'll leave it relatively open-ended. What did you take away from this recent launch, and what does it mean for SpaceX now going forward?

Andrew Chanin (0:30)

Each iteration of these test launches have been more impressive than the previous ones. Obviously, I think the HICUP that you're referring to was some engine troubles, which is why they shortened the orbital part of this mission, and bring the rocket back down to splash down a little bit earlier than typically they would have hoped for. However, the deployment of these version 3 satellites into orbit were extremely successful, and it's setting up a really powerful, compelling story for SpaceX into the future, to the extent that they can get some important learnings from these previous HICUPs and get rid of them in the future. So, this is nothing but exciting for SpaceX, as well as for the broader space economy, and what else could be possible when you drive down the cost of launch.

Alex Caulfields (1:22)

Andrew, I think this is always a fun conversation, but can be a difficult one when you're trying to perceive and understand something that hasn't been done before from an investment opportunity standpoint. We sort of have two major ones happening at once, right? And this is a company that's sort of front and center for both. One, the AI uncertainties and what's possible on that front.

And then this space opportunity, which of course is the bread and butter for SpaceX. You mentioned the satellites that they got up there, the V3s for Starlink. In the interim, so let's say now, is the Starlink opportunity the greatest one from your perspective?

Andrew Chanin (2:07)

I mean, the Starlink opportunity is one that is generating revenues real time, to the extent that they could send up one satellite that has the capabilities of 10 version 2s. You can see how they could really scale this. And so as they bring these new satellites online, as they push forward utilizing Starship and hopefully significantly reduced costs per satellite, it's truly a tremendous opportunity. And so they can bring in new customers, they can bring in new technologies, they want to create more Starships, they're building out their presence in Louisiana, which was a huge win that was probably under the radar to most facility that we were looking at prior to that announcement.

They're doing a lot of really important things. And what we notice is this is a company that has this long term vision. Not every company is afforded that opportunity, but they have this long term vision. They do what many think seem to be impossible, but as they build out this infrastructure, they're able to do so much more on top of that. So it's not just what they're able to do now and demonstrate now, but it's how they'll be able to utilize that infrastructure to build out whatever their next iterations of technologies and goals may be.

Alex Caulfields (3:21)

And I'm guessing since this is still in that test phase, at least there's confidence, but it's the first time they've completed it.

There's opportunity for them to scale this up rather quickly in terms of maybe the frequency or even just how many satellites they bring on a mission. My understanding is not only are the satellites much more robust and they can achieve much more than the version 2s, but the new ship can also carry more than the old ships.

Andrew Chanin (3:52)

Exactly. And so this most recent test flight, they only use about almost 50 percent of the payload. So you can imagine doubling that capacity with each satellite being 10 times more powerful.

And it's truly something that I think people are scratching their heads. I mean, when we first launched UFO back in 2019, there were roughly 2,000, 2,500 operational spacecraft in low Earth orbit. And now just looking at what SpaceX is doing alone, it's putting multiples onto that number. And just in January, they filed, they applied to be able to launch upwards of about a million of these AI satellites for a constellation. So SpaceX alone is starting to really take up a lot of space in low Earth orbit. And that's also going to force other companies to try to bring their capabilities forward earlier as low Earth orbit starts to get a little bit more cluttered.

Alex Caulfields (4:51)