With New Glenn in Its Pocket, Can Blue Origin Compete With SpaceX and Starship?

Once a company dabbling only in "space tourism," Jeff Bezos' Blue Origin turned into an honest-to-goodness space company last week. In the early morning hours of Jan. 16, at 2:03 a.m. ET, a Blue Origin New Glenn rocket ship lit up the skies over Cape Canaveral, successfully reaching space on its first try, and delivering a prototype Blue Ring space tug into orbit.

The mission wasn't 100% successful. After delivering its cargo, Blue Origin attempted to land the New Glenn booster on a barge at sea, a la SpaceX and its Falcon 9 reusable rockets. New Glenn missed its target, though, and plunged into the sea, which was something of an anticlimax.

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Still, it took SpaceX five tries to get its own sea landings right. Blue Origin, too, will get this figured out eventually. And when it does, SpaceX will face its first real competition in space: another company with another reusable rocket, charging almost the same price per launch that SpaceX charges -- but delivering twice as much cargo per launch.

For investors hoping to invest in future IPOs of SpaceX and Blue Origin, the question is obvious: How does SpaceX expect to deal with that?

Image source: Blue Origin.

New Glenn versus Falcon 9

SpaceX's own website lays out the problem in black and white. Maxed out for an expendable launch, a Falcon 9 rocket ship can carry at most 22 metric tons of payload to low Earth orbit (LEO), and it costs $69.8 million per launch. In contrast, Blue Origin hasn't yet advertised a price for New Glenn. But we know its rocket can carry 45 metric tons of cargo to LEO (twice Falcon 9's payload by mass), and Blue advertises New Glenn as having "twice the volume" of Falcon 9 as well.

As regards price, one rival space company estimates New Glenn will cost $68 million per launch.

New Glenn versus Starship

At first glance, you'd think SpaceX would have quite a task ahead of it, trying to persuade customers to pay $1.8 million more money for 50% less capability. And yet, SpaceX has known New Glenn was coming for years, and SpaceX hasn't remained idle.

Rather, it's forged ahead with development of a new rocket: Starship.

Going forward, SpaceX is likely to offer its gigantic Starship rocket as a competitor to New Glenn, and here, the advantage shifts back to SpaceX. Bigger than New Glenn (120 meters tall versus 98) and with a wider faring to encapsulate cargo (9 meters versus 7), SpaceX's Starship will boast a massive payload advantage over Blue Origin's new rocket.

A single Starship (once it's operational), should be able to launch up to 250 metric tons to LEO -- five times New Glenn's payload. Even operating in a reusable configuration, using some of its payload capacity to carry extra fuel for landing, Starship can still carry 100 to 150 tons of payload to orbit.

Nor is payload Starship's only advantage. Payload Research last year published a detailed analysis of Starship's cost, concluding that already today, SpaceX can probably build and launch Starships for $90 million each. As development concludes, SpaceX begins mass production, and economies of scale kick in, Starship costs are expected to approach $10 million per launch or less.

Admittedly, it will take some time to get there. SpaceX's most recent Flight Test 7 concluded with its Super Heavy booster successfully completing a "tower landing" on Mechazilla, but the Starship second stage did not survive reentry and will require further testing before it can become operational. But that just puts SpaceX in the same boat as Blue Origin: Both companies have a little more work to do before their new rockets are ready for prime time.

What this all means for investors

Long story short, and contrary to what Blue Origin's marketing department would like you to believe, this isn't really a contest between New Glenn and Falcon 9 at all. (Indeed, SpaceX President Gwynne Shotwell says SpaceX will probably retire Falcon 9 completely within the next six to eight years.) Rather, it's a contest between New Glenn (which is still figuring out sea landings) and Starship (which is still figuring out all sorts of things).

As things stand today, I suspect New Glenn will become fully operational before Starship does. But both companies are well on their way to getting their new rockets finalized. And once they do, I think it's pretty clear that the larger, cheaper, and fully reusable Starship will prove the superior design.

Advantage: SpaceX.

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