It's Getting Crowded in Satellite Space

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Perhaps one of the more eagerly anticipated events for stock markets is the IPO of SpaceX. On Monday, the company announced that it had acquired xAI, a sister company also controlled by Elon Musk. The deal would result in a company worth $1.25 trillion, reportedly according to SpaceX’s own estimates, and the merger sparked rumors – currently unsubstantiated, mind you  – that Musk would go for the hat trick and somehow merge SpaceX with Tesla TSLA 0.06% . 

The narrative supporting the investment case for SpaceX is not particularly surprising. SpaceX is one of the leading private-sector contractors working in the field of space exploration, and its Starlink network of satellites (9,500 strong and counting), is an overwhelming leader in space-based broadband telecommunications services.

Yet competition is growing. Jeff Bezos’ Blue Origin, as well as Amazon’s separate Kuiper satellite division, have plans to take on Starlink, for example. Non-U.S. rivals see opportunity as well, sparked in part by an increasingly common view amongst U.S. allies that depending on U.S. technology is not the most prudent course of action, so they’re looking beyond sovereign AIs to satellite services. 

That’s been a boon for European satellite companies, so much so that Germany’s Rheinmetall AG RNMBY, a defense contractor better known for its tanks and artillery, is considering an expansion into the space (pun not intended), competing with the likes of Airbus, Thales Alenia, and Finland’s Iceye. (Rheinmetall’s bid to create “Starlink for the Bundeswehr” would reportedly feature a partnership with Germany’s privately held OHB. Meanwhile, Airbus and Thales Alenia, itself a joint venture between France’s Thales and Italy’s Leonardo, have proposed a merger that has yet to begin regulatory review.)

The EU’s ambition to upgrade its own satellite capabilities is arguably long overdue. A Financial Times story from yesterday reported that Russian space vehicles have intercepted communications of “at least a dozen key satellites” over Europe, compromising sensitive transmissions and potentially even giving Russia the ability to manipulate their trajectories. According to the FT, the Russians were aided by the age and antiquated technology of the satellites, put into orbit at a time when command-link encryption capabilities were judged to be non-essential. 

“Satellite networks are an Achilles heel of modern societies. Whoever attacks them can paralyse entire nations,” German defence minister Boris Pistorius said in a speech last September. Yet Musk, Bezos, and all of their competitors are also facing a threat that isn’t manmade at all. 

Last month, a Princeton University researcher Sarah Thiele warned that low-earth orbit, where the vast majority of new satellites reside, is now so crowded that the likelihood of a widespread outage in satellite-based services, caused by a Kessler Syndrome-driven chain reaction of collisions, has become increasingly likely. Thiele and her co-authors called it an “orbital house of cards.”

Satellite operators are increasingly being forced to execute collision avoidance maneuvers. Starlink alone executed 300,000 of them in 2025, an average of almost one every two minutes and an annual increase of 50%. As everyone else (we didn’t even mention Chinese efforts in this piece) seeks to deploy their own armada of satellites, this trend seems unlikely to reverse (though it is worth noting that Starlink opts errs on the side of caution in this matter, triggering such maneuvers far more frequently than industry cohorts). 

Thiele and her colleagues ran a simulation, estimating how long it would take for a serious satellite collision event to take place if all such maneuvers were to stop. In a metric dubbed the CRASH (Collision Realization And Significant Harm) clock, they estimate that a catastrophic satellite collision is likely to take place in just 5.5 days if all collision-avoidance maneuvers were to stop or be disabled – for instance due to a solar storm. The subsequent chain reaction of debris could then cause a far greater and indiscriminate outage in satellite-based services. 
As the paper notes, that’s not beyond the realm of possibility: a modern-day equivalent of the Carrington Event of 1859 would have been strong enough to knock out satellites’ ability to maneuver for far longer than just 24 hours.

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📧✍️Here’s what a reader commented📧✍️

Q: Which do you favor as an investment, Amazon or Walmart?

A: First impressions linger. Amazon seemed always fresh and new. Their innovations made my life better and easier. I loved my first Kindle that was connected with the “Whispernet” for free! Walmart on the other had cheap products I didn’t want with stores that smelled like chemicals. The later generations probably have different perspectives that I can’t relate. However, I agree with you that the competition between the two will make them both better and investable.

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