How much is billionaire Jeff Bezos spending on Blue Origin?

In the universe of space investments, SpaceX is a leader. Valued at just $10 billion in 2015, when Fidelity and Google made their brilliant $1 billion investment in the company to help Starlink get off the ground, SpaceX’s stock has skyrocketed to $210 billion in total market capitalization earlier this year. That’s a 20x return in less than 10 years.

Given the wildfire success that is SpaceX, it makes sense that other companies would duplicate its success — and that other billionaires such as Amazonhis (AMZN 0.91%) Jeff Bezos would like to follow in the footsteps of SpaceX CEO Elon Musk.

Doing so is not cheap, however.

Bezos is doubling down on Blue Origin

In 2000, Jeff Bezos founded Blue Origin as a space startup looking to lower the cost of launching into space. According to information from S&P Global Market Intelligence, it was actually two years before Musk had a similar idea at SpaceX. However, SpaceX got off to a much faster start.

Perhaps inspired by SpaceX’s success in attracting investment from Google, in 2015 Bezos accelerated Blue Origin’s development by launching the company’s first space vehicle, the New Shepard suborbital rocket. A few years later, Bezos went up an even higher gear, telling investors he was selling “about $1 billion of Amazon stock a year … to invest in Blue Origin.”

Since then, Blue Origin hasn’t accomplished much, or at least not much that was visible from the outside. Besides setting up a space tourism business and ferrying a few passengers to the edge of space, his efforts to build a lunar lander, a space tug, and especially a larger rocket — the New Glenn — progressed slowly. But maybe some more money would help?

In a report published last week, Payload Space noted that Blue Origin’s workforce has grown to 11,000 employees — almost as many as SpaceX’s workforce of 14,000, despite SpaceX making much more progress larger in its space projects. Unfortunately for Blue Origin (and Bezos), I guess cost to keep so many employees on the payroll has also grown to $2 billion a year or more.

With little revenue coming in to support such large expenses, it’s likely that Bezos has had to at least double his financial backing of the fledgling space company — and employee salaries are only a fraction of the expenses he’s incurring Blue Origin.

In Florida, the company built a massive factory for the production of New Glenn rockets (although the rocket has not yet flown). Development costs for the new Glenn will hurt the company. There’s also the cost of developing a new “Blue Ring” space tug (which will be the payload of New Glenn’s maiden flight in November), a Blue Moon lunar lander, and the Orbital Reef space station that Blue Origin is collaborating on. .

So it’s no surprise that sales of Bezos’ Amazon stock are starting to peak — $8.5 billion sold in February, with another $5 billion in planned sales announced in July.

What Bezos gets for his money

Additionally, all of these sales of its founder’s stock have put Blue Origin in a stronger position to complete several space projects it currently has in the works. On the downside, even Bezos’ wealth isn’t infinite — and it’s taken a big hit since his 2019 divorce settlement. Eventually, Blue Origin itself will start to carry some of its own weight and generate some income to support all these investments he makes. Can you make it?

A successful launch of New Glenn in November would help. That said, we still don’t know how much Blue Origin will charge for New Glenn rocket rides. If Blue Origin is to match the price of SpaceX’s Falcon 9, for example, which lists at just under $70 million per launch, well, it’s going to have to win a lot of launch contracts to even break even. salary costs alone of $2 billion.

The good news for Blue Origin is that its founder, Bezos, happens to have some pretty substantial ties to Amazon. Those ties likely played a (big) role in Amazon’s Blue Origin winning contracts in 2022 to launch 12 New Glenn rockets carrying satellites for Amazon’s Project Kuiper satellite internet project — and winning options for 15 more releases.

However, assuming a launch cost of $70 million for New Glenn, all revenue from all those 27 launches mix it still won’t offset Blue Origin’s $2 billion salary cost. Simply put, Blue Origin will need to win new customers and new contracts for this business to succeed.

Even with a backer like Bezos behind it, success for Blue Origin is not guaranteed.