Spacecom’s Stock Crashes 40+ Percent After Falcon 9 Accident

Credit: Tel Aviv Stock Exchange
Credit: Tel Aviv Stock Exchange

Spacecom’s stock has crashed more than 40 percent after its Amos-6 communications satellite was destroyed in a SpaceX launch pad accident in Florida on Thursday.

Quoting a statement the company released to the Tel Aviv Stock Exchange and Israel Securities Authority, Jerusalem Online reports that Spacecom will demand $205 million in compensation from Israel Aerospace Industries (IAI), which built the satellite, and $50 million from SpaceX, whose Falcon 9 rocket exploded with Amos-6 on board.

The Times of Israel reports that IAI will pay the money from an insurance policy it purchased on the satellite.

In addition, the Israeli company said it expects to receive either $50 million from SpaceX or “have the launch of a future satellite carried out under the existing agreement and with the payments that have [already] been made.”

Additional insurers are expected to pay SpaceCom an additional $39 million, the company said in a statement Saturday night.

However, SpaceCom’s future is far from certain….

The launchpad explosion could also jeopardize a pending deal for the sale of the private Israeli firm to China’s Xinwei group, reportedly worth $285 million and conditional on the satellite successfully entering service, the Israel Space Agency (ISA) said Friday.

SpaceX is continuing to investigate the cause of the accident, which CEO Elon Musk began with a fire in the upper stage that caused an explosion. The rocket was being fueled for a pre-flight static fire of its first stage engines in preparation for a scheduled Sept. 3 launch.

  • windbourne

    Spacex charged only 50 million for this?
    Pretty low.

  • Paul_Scutts

    “In addition, the Israeli company said it expects to receive either $50 million from SpaceX or “have the launch of a future satellite carried out under the existing agreement and with the payments that have [already] been made.”” – IMO, this is an unreasonable expectation. SpaceX would have made their customer, Spacecom, very much aware of the risks involved when you fuel a rocket, that’s why there are no personnel permitted near the launch vehicle and why no one was killed or injured during the “live fire” test. These situations are what insurance is for. So, unless Spacecom specifically instructed SpaceX not to have their payload integrated with the rocket for the test or they can prove willful negligence on the part of SpaceX and their personnel (hard to do when the cause(s) are not yet known), then they do not, IMO, have a case to “expect” any form of compensation from SpaceX. SpaceX may choose to “help” them, but, that is up to them and should not be expected. I understand that there was a lot riding upon a successful launch for them and that this failure looks like it has or will cost them dearly.

  • Douglas Messier

    Depends upon how the contract is structured. Perhaps there is a final payment after launch.

  • JamesG

    Oh look! Motive.

  • windbourne

    Good point.

  • windbourne

    My understanding is that payloads normally are not on for static fire. Spacecom insisted that it be on it.

  • Paul_Scutts

    That’s very interesting, windbourne, I wonder why they insisted?

  • windbourne

    Doug was correct. Basically, for large orders in just about anything, you get a partial up front. That way you can buy supplies, initial services, etc. This is even true when building large buildings, etc.
    I just wasn’t thinking, but Doug always is.

  • Douglas Messier

    My understanding is that SpaceX began this practice of putting the payloads on board for static fires earlier this year as a way of saving about a day of processing time. I don’t think it’s a very sound practice because it defeats the purpose of the test, i.e., finding out if the rocket is working. Why provide two opportunities to blow up the payload?

    The one theory I’ve heard is that they were trying to launch before a tropical storm hit Florida. I don’t know if that is true, but if that was the goal it was really really bad decision by both parties.

    Whatever the reason for putting the satellite on board, it was SpaceX’s fault for destroying the rocket.

  • Paul_Scutts

    Thanks for your reply, Doug. I’m not comfortable with your last sentence, “SpaceX’s fault for destroying the rocket”. The jury is still, IMO, well and truly out on determining fault. I’m no rocket engineer, technician or lawyer. But, it seems to me that a launch company would have their customers sign all sorts of wavers for unforeseen causes to the loss of their valuable equipment. Ultimately, while SpaceX may have their ass legally covered, they would be sensitive to their customers perceptions and expectations. Time will tell how all of this will ultimately pan-out. Regards, Paul.

  • Douglas Messier

    Technically it’s SpaceX’s responsibility not to blow up the rocket. Unless they can find someone else to blame the accident on (supplier, saboteur), somebody at SpaceX effed up here. It does not appear to have been a problem with the satellite based on what we can see on the video.

    Legally, I don’t know where the responsibilities lie. If Spacecom signed waivers and put put the satellite on the rocket for a static fire, then SpaceX might owe them nothing.

  • Rocketplumber

    Savvy investors are buying Spacecom now. Econ 101.