Jeff Bezos is opening Blue Origin to outside investment for the first time in the rocket company’s 25-year history, following a costly explosion that has complicated its financial outlook.
The move marks a significant shift for Bezos, who has until now served as Blue Origin’s sole financial backer throughout the company’s entire existence.
The timing is difficult, coming just days after Blue Origin’s New Glenn rocket detonated during a static fire test on May 28, destroying one of the company’s most advanced rocket designs.
The New Glenn rocket carried a price tag of between $100 million and $150 million to build, and its total loss compounds the damage inflicted on Blue Origin’s new launch facility, which cost roughly $1 billion to construct.
Engineers at Blue Origin have reportedly not yet identified the root cause of the explosion, adding further uncertainty to the company’s near-term operational outlook.
The disaster arrives at a particularly painful moment for Blue Origin, as rival Space Exploration Technologies (NASDAQ: SPCX) has seen its valuation soar above $2 trillion following a successful IPO.
Bezos had signaled as recently as May 20 that conditions were becoming favorable for outside investment, stating there was finally “enough visibility into our future and our financial success” to bring in new backers.
“It’s a good time actually to start thinking about the future and bring on some other outside investors,” Bezos said, just eight days before the New Glenn explosion upended those plans.
Blue Origin is reportedly burning nearly $5 billion per year, a rate that analysts expect could increase in the wake of the New Glenn disaster and the associated reconstruction costs.
Any capital raise Blue Origin pursues will almost certainly be limited to institutional investors, with retail investors unlikely to gain direct access, though exposure through funds or investment vehicles could potentially emerge further down the line.
An IPO, which had been a subject of growing speculation before the accident, now appears highly unlikely in the near term as the company works to stabilize operations and restore confidence in its capabilities.
The New Glenn explosion has almost certainly weighed on Blue Origin’s valuation, suggesting that even if a fundraising round moves forward, it may be more modest in scope than Bezos had originally envisioned.
