SpaceX: Following Through On The Impossible

| About: SpaceX (SPACE)

Summary

SpaceX successfully landed a rocket on a drone ship for the first time on Friday.

This is a huge step forward in its reusable rocket project.

If SpaceX is able to consistently reduce the cost of sending payloads to space through the use of reusable rockets, it will become the preeminent company in the aerospace industry.

Introduction

SpaceX (Private:SPACE) successfully landed a rocket upright on a drone ship for the first time ever on Friday. The Falcon 9 rocket launched from Cape Canaveral, Florida as part of a cargo resupply mission to the International Space Station.

Click to enlarge

Falcon 9 rocket, Source: SpaceX

What is remarkable about Friday's event is that the Falcon 9 completed its burn, landed upright on the drone ship, and thus demonstrated the viability of reusable rockets. This is the first successful landing on a drone ship for SpaceX after four previous failures. Although last December SpaceX was able to land the first stage of the Falcon 9 rocket on land, this is the first time it has happened at sea. With SpaceX's ambitious target of completing 18 launches in 2016, this is a major step forward in distinguishing itself from its peers.

Reusable Rockets

The reason why reusable rockets are so important is because this will dramatically reduce the cost of reaching orbit. The traditional model to reach orbit has been the same since the 1950s. In that model, rockets were used only once and were then left to burn up on reentry.

This is an important factor that distinguishes SpaceX compared to its peers. Although Jeff Bezos's Blue Origin (Private:BORGN) is also working on reusable rockets with some success, the low cost of the Falcon 9 is unbeatable. According to SpaceX, a Falcon 9 launch costs an average of only $57 million. This is much cheaper than anyone else, including Boeing (NYSE:BA) and Lockheed Martin's (NYSE:LMT) United Launch Alliance.

Even though SpaceX only flew six missions last year, its goal of completing 18 launches this year will be a huge step forward for the company if it happens. If it is able to demonstrate a consistent ability to successfully deliver cargo and reuse rockets, this will lead it to become the preeminent private space company in the aerospace industry.

Conclusion

Although CEO Elon Musk is quite profligate when it comes to costs at Tesla (NASDAQ:TSLA), he takes the complete opposite approach when it comes to his work at SpaceX. His ruthless focus on cost-savings have enabled SpaceX to survive and thrive since its inception in 2002. The Falcon 9's landing on Friday demonstrates ongoing success with the company. SpaceX is profitable and its $12 billion valuation ensures that it will continue to be a major player in the aerospace industry now and into the future.

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I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.