The federal government’s spending on satellites, both military and commercial, is rising exponentially. With different players in the mix, the Department of Government Efficiency (DOGE) agency may not recommend major cuts to the planned expenditures on these products. Given these points, investing in companies that develop satellites for the federal government may be a wise move at this time.
Rapidly Increasing Spending by Washington on Satellites
During the fiscal year that ended last September, the federal government’s Space Force was slated to award about $20 billion in contracts for satellites. (The latter figure also includes spending on GPS systems hosted by satellites). The $20 billion represents a huge increase compared with the $1.6 billion of deals that were handed out in the previous fiscal year. What’s more, the Pentagon has sought to spend $134 million on “commercial satcom integration” in fiscal 2025 up from just $71 million in FY24.
If the Space Force uses the funding to create “a dedicated working capital fund,” the military branch would have a much easier time utilizing commercial satellites, said Viasat (VSAT) Senior Vice President for Government Strategy and Policy Rebecca Cowen-Hirsch. Such a fund would consist of money earmarked for the military to spend on commercial satellites. According to Cowen-Hirsch, the large increase in the Pentagon’s spending request is in line with the Defense Department’s policy which backs utilizing commercial space offerings.
DC Spending on Satellites Growing
Musk’s SpaceX is reportedly going to become involved in selling satellites to Washington (Musk owns a 42% stake in the firm, according to multiple reports). Specifically, one of the U.S. intelligence agencies has committed to paying SpaceX $1.8 billion to provide “spy satellites,” according to Reuters. Additionally, on Dec. 6, Bloomberg reported that the Pentagon had given SpaceX a deal ” to expand Ukraine’s access to a more secure, militarized version of its Starlink satellite network,”. Given the fact that SpaceX appears poised to generate significant revenue from U.S. spending on satellites, Musk could very well be reluctant to recommend stifling the growth of Washington’s expenditures on these products.
One little-known, publicly traded company that appears to be starting to tremendously cash-in on the government’s increasing interest in satellites is BlackSky Technology (BKSY). BlackSky says that it “own(s) and operate(s) the world’s most advanced space-based intelligence platform, providing satellite imagery, analytics, and high-frequency monitoring.” The company added that it offers “the world’s most advanced commercial tactical intelligence, surveillance and reconnaissance (ISR) system.”
Sealing the Deal
In recent months, BlackSky has won two huge deals from the federal government. First, in October, the company was awarded a five-year deal worth up to $290 million by the National Geospatial-Intelligence Agency. Under the contract, the firm will “monitor global economic activity and military capability,” BlackSky reported. Secondly, in September, BlackSky was awarded a “multi-year, indefinite-delivery/indefinite-quantity contract” worth up to $476 million by NASA. BlackSky will provide NASA with “satellite imaging data” that will “support….the agency’s existing Earth observation research.”
In the third quarter, the company’s revenue rose 6% versus the same period a year earlier to $22.5 million, while its operating loss fell to $13.2 million from $14.5 million in Q3 of 2023. But clearly, the huge contracts that the firm has obtained in recent years, along with Washington’s increased spending on satellites, are the main reasons to be optimistic about the outlooks of BlackSky and BKSY stock.
