Elon Musk's SpaceX Delivering On Cost Declines Predicted By Wright's Law, Says Ark Analyst

Researchers from Cathie Wood’s Ark Investment Management believe that Elon Musk’s SpaceX is delivering on the cost declines predicted by Wright’s Law — a model on which Ark has centered its research.

What Happened: The law was pioneered by Theodore Wright in 1936 and aims to provide a reliable framework for forecasting cost declines as a function of cumulative production, Ark explained on its website.

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Sam Korus, director of Research, Autonomous Technology & Robotics at Ark wrote in a note that the fund’s modeling suggests SpaceX already has lowered the cost per kilogram to orbit by two orders of magnitude, or close to 15% cost decline for every cumulative doubling of mass to orbit. “Because it drives demand for rocket launches with its Starlink satellites, SpaceX has the economic incentive to optimize and drive costs lower,” Korus said.

SpaceX is the most valuable among the privately-held companies in the U.S. The company is now reportedly selling insider shares in an offering, with the implied valuation shooting up by about 10% since July. SpaceX has priced the shares at $77 apiece, giving the company a staggering valuation of $140 billion, the report said.

Korus noted that costs will decline only if companies focus their operations on lower costs and that for decades, governments seem to have operated the space industry with little notion that lowering costs might drive demand. “Then, SpaceX entered the market,” he said.

Korus believes that as SpaceX develops the Starship rocket, launch costs will continue to fall. “Now, the important questions are: How quickly will SpaceX get Starship into orbit, and how soon will SpaceX deploy a reusable Starship?” he noted.

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