Citi GPS "Space: Dawn of a New Age" — A Credibility Assessment

What the report actually says, and why you should be cautious

The Report#

Published May 2022 as a Citi Global Perspectives & Solutions (GPS) report. Lead author: Pavan Daswani (Citi Research, Europe Technology Analyst). Co-authors span technology, ESG, and telecom coverage teams — financial analysts, not aerospace engineers.

Headline Numbers#

The report's overarching thesis: the space economy reaches $1 trillion in annual revenue by 2040, enabled primarily by lower launch costs.

Methodology#

The core model is straightforward: take vehicle build cost, divide by number of reuses, add per-flight operating costs (propellant, ground ops, refurbishment), divide by payload mass.

This is simple division, not aerospace engineering. The entire projection depends on two inputs:

1. How many times can a Starship be reused?
2. How much does each reflight cost?

Neither input has any empirical basis — Starship has never been reused.

Why You Should Be Cautious#

1. Investment Bank Motivation#

GPS reports exist to support investment theses. This one supports "the space economy will be huge," which supports bullish cases for companies in Citi's coverage universe. The report explicitly forecasts $1 trillion in space revenue by 2040 — the low launch costs are required to justify that forecast, not independently derived.

2. Circular Logic#

The cost model requires high flight rates to amortize vehicle costs. High flight rates require massive demand. Massive demand requires low prices. Low prices require high flight rates. The model works if all assumptions hold simultaneously, but any break in the chain causes the whole projection to unravel.

3. Unvalidated Reuse Assumptions#

• Bull case ($33/kg): Requires 100 reuses per Starship vehicle. As of early 2026, Starship has been reused zero times. Falcon 9 boosters — a simpler vehicle that only does first-stage recovery (suborbital) — have reached ~30 flights. Assuming 100 reuses for a vehicle doing full orbital re-entry is not extrapolation; it's speculation.

• Base case ($100/kg): Requires 30–50 reuses. More plausible, but still 2–3× beyond Falcon 9's demonstrated capability, for a more stressed vehicle.

• Bear case ($300/kg): Requires ~10 reuses. This is actually where Falcon 9 already was around 2020–2022. Most grounded assumption.

4. Industry Echo Chamber#

Morgan Stanley, Bank of America, Citi, and HSBC all converge on roughly the same $1T/2040 space economy figure. This isn't independent validation — it's investment banks reading each other's reports and converging on an industry consensus narrative. They all use SpaceX-provided assumptions about Starship performance. If SpaceX's assumptions are wrong, they're all wrong simultaneously.

5. Buried Caveats#

The report itself acknowledges "much about the industry remains speculative" and flags "the harsh environment of space, the steep upfront capital costs and the long timeline to see returns" as significant risks. But the headline numbers ($33/kg bull, $100/kg base) get cited everywhere while the caveats disappear.

6. Hindsight Check (2022 → 2026)#

The report was published in May 2022. As of early 2026:

• Starship has had several test flights but has not achieved full reusability
• No commercial Starship payload has been launched
• Falcon 9 list prices actually increased (from $2,720 to $2,940/kg)
• The cost trajectory has not bent downward as the report's timeline implied

What's Actually Credible#

The bear case ($300/kg at 10 reuses) is reasonable. It:

• Maps to demonstrated technology (Falcon 9 booster reuse rates)
• Uses conservative reuse assumptions
• Aligns with our independent fuel-economics markup analysis ($340–560/kg)
• Doesn't require technological breakthroughs

The base case ($100/kg) is optimistic but not impossible if Starship achieves 30–50 flights per vehicle with high cadence. Call it a "stretch goal" rather than a projection.

The bull case ($33/kg) is a promotional number built on undemonstrated technology, circular demand assumptions, and financial analyst optimism. It should not be used in serious economic analysis.

Comparison: Citi vs. Academic Analysis#

The FCC-affiliated economic analysis by Adilov et al. (Economics Bulletin, 2022) used actual historical launch cost data (2000–2020) and standard econometric methods to project that average launch prices will fall below $1,000/kg between 2045–2076.

This is dramatically more conservative than Citi — suggesting the average across all vehicles won't reach $1,000/kg until mid-century, let alone the $33–100/kg Citi projects for Starship alone by 2040.

The academic analysis explicitly notes that individual vehicles may hit lower costs sooner than the market average, but even so, the 20+ year gap between academic and investment bank projections is telling.

Summary#