1/ The $4.25 billion Europa Clipper will launch on SpaceX Falcon Heavy rocket, NASA officials announced July 23. The total value of the contract is ~$178 million. space.com/nasa-picks-spa…
Europa Clipper has a mass of ~ 6,000 kilograms.
$178 million / 6000 = $29,000 a kilogram
2/ "The White House estimated that the original plan to launch on a SLS rocket would cost more than $2 billion for the Clipper mission. Scientists were also concerned that the oft-delayed SLS rocket would simply not be ready for a 2024 launch date." arstechnica.com/science/2021/0…
3/ The best way to compare rocket launch costs apples to apples is on a cost per kilogram basis.
Pretend the extra $1 Billion isn't required to stop the shaking of the SLS from wrecking the Europa Clipper spacecraft.
$2 billion/ 6,000 kilograms is $333,333 a kilogram.
4/ SpaceX is so much cheaper than alternatives that France and Germany "agreed to give Ariane 6 and the new Vega version a preferential status for public and institutional launches." spacewatch.global/2021/07/france…
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“Companies generating high economic returns will attract competitors willing to take a lesser, albeit still attractive return, which will drive aggregate industry returns to opportunity cost of capital.”
X: "You were writing symphonies when you were 10 years of age, and I am 21.”
Mozart: "Yes, but I didn’t run around asking people how to do it.”
3/ Everyone has the idea of owning great companies. The problem: they have high prices in relation to free cash flow.
"That takes all of the fun out of the game. If all you needed to do is to figure out what company is better than others, everyone would make a lot of money."
They're too focused on GAAP earnings and not sufficiently focused on cash flow and intangible assets.
"Jeremy Grantham’s firm expects investments to lose money in 10 of 11 asset classes over the next seven years. Emerging-market value stocks are the lone asset class GMO expects to have a positive return over the next seven years." bloomberg.com/news/articles/…
"Netflix will license some games... Netflix's intellectual property is a key differentiating factor against other rivals in the space. The first of those [differentiating factors] is about the IP we create." google.com/amp/s/www.cnbc…
2/ For a clue about the answer read my two blog posts on Reed Hastings. The posts are free, which is priced to sell:
1/ Operating a business in space (space-to-space) or from space (space-to-Earth) involves a "cold start" or "chicken and egg" problem.
Some business activities aren't feasible until the cost of getting to space is lower (e.g., finding new services with product market fit).
2/ The price of something like transistors, communications or access to space dropping significantly creates optionality.
Optionality is the property of asymmetric upside (preferably unlimited) with correspondingly limited downside (preferably tiny).” 25iq.com/2013/10/13/a-d…
2/ "When you see something occur in a complex adaptive system, your mind is going to create a narrative to explain what happened—even though cause and effect are not comprehensible in that kind of system. Hindsight’s a beautiful thing."
I can do this about the Internet bubble.
3/ One spark causing one phenomenon underlying the dotcom part of a lollapalooza occurred in 1993 when it was finally legal to use a business application on the Internet. This change in the law caused people like Jim Clark to invest in firms like Netscape. 25iq.com/2018/03/03/bus…
1/ You find a lamp and after you rub it a genie appears and offers you one of two businesses:
1. Business A generates $10,000 in "earnings" each month;
Or
2. Business B generates $10,000 in "free cash flow" each month?
Would you select Business A or Business B?
2/ Cash flow rather than reported earnings is what determines value for an investor. You can't spend someone's opinion that a business generated an accounting profit. Earnings are only a clue about future cash flows. That and other clues about cash flow can be misleading or not.
3/ Why do so many investors focus on earnings rather than free cash flow ?
"convenient availability, single-number simplicity, auditors provide presumed authority and a shortcut, freeing investors from the need to assess long-term cash-flow prospects." expectationsinvesting.com/pdf/earnings.p…