A delegation from Houston consisting of former astronauts, aircraft experts, and local leaders were invited to the Paris Air Show to represent the Space City. Photo courtesy of the Greater Houston Partnership

Houston takes flight at Paris Air Show just in time for Space City Month​

Oui, oui

As we move closer to the 50th anniversary of Apollo 11 in mid-July, eyes around the world are turning to the United States and to Houston's NASA Johnson Space Center in celebration of the historic mission that first brought mankind to the moon. Thanks to that unprecedented interest, Houston was asked to be a featured partner of the USA Partnership Pavilion at the Paris Air Show last month.

Drawing nearly 2,500 exhibitors from 49 countries and more than 316,000 total visitors, the Paris Air Show continues to be the world's premier aerospace and aviation industry event. Houston's historic achievements set the stage to showcase how the region continues to be a global hub for technology and innovation.

A delegation of top Houston organizations brought distinct assets that showcased a collective advantage in competing for aerospace business. Led by the Greater Houston Partnership under the promotional banner Space City: The Gateway to Innovation, the group included:

  • Houston Spaceport, one of the nation's 10 licensed commercial spaceports co-located at Ellington Field (EFD).
  • Rice Space Institute, which has helped to establish Rice University's international reputation in all areas of space research by investing in efforts to further the development of new ideas and innovation in the broad area that is space exploration and utilization.
  • SpaceCom, the Space Commerce Conference and Exposition, an annual two-day conference that connects NASA technology with the private sector to fuel future innovation
  • Space Center Houston, the official visitor center of NASA's Johnson Space Center and a leading science and space learning center.
  • Blue Bear Capital, a Houston-based venture capital firm investing in fast-growing private companies that apply data driven technologies and innovative business models to the global energy supply chain.
  • Trumbull Unmanned, A Forbes Top 25 Veteran Founded startup based out of the Houston Spaceport that collects, analyzes, and visualizes critical data for the energy sector, primarily supporting oil and gas and environmental efforts.

As an anchor NASA community and home to the sharpest minds in aerospace, life sciences, energy and innovation, it was only fitting that Houston have a prominent presence in the show at Le Bourget. Among the 300 exhibitors representing the United States in the USA Partnership Pavilion, twenty of which were states, Houston was the only city with a major presence. Throughout the week, the Houston delegation participated in a schedule of high-profile thought-leadership and hospitality events to engage and educate global industry and government decision-makers and influencers.

For our part at the Greater Houston Partnership, we were able to conduct a series of meetings with companies from around the world, gathering more than 40 international and domestic economic development leads. The show is also a great media opportunity that allowed us to secure nearly 20 interviews for our delegation members with print and broadcast outlets from across the U.S. and Europe.

The USA Partnership Pavilion's week-long celebration of innovation and human achievement was led Apollo Astronauts Brig. Gen. Charlie Duke, and Houston-natives Col. Walt Cunningham and Col. Al Warden. Their presence served as a tangible way to connect our nation's achievements to the innovative future of the global aerospace industry.

"The 50th anniversary is such a unique time in history. It gives us an opportunity to think back about what we did, realize where we are today, and where we want to be in the future," says Col. Al Worden, "The most important thing about the space program was not so much about putting a man on the moon, it was about developing the technology to get there. Those technologies have made this country so successful, and I hope we continue to see that type of commitment to technology development in the future."

Houston delegates were asked to participate in several thought leadership panels.

"As we continue to explore further into the universe, there are a myriad of technical challenges that need to be overcome," says David Alexander, director of Rice Space Institute, who moderated a panel discussion on advancing technologies that will help humans physically and mentally adapt to deep space exploration. He was joined by industry leaders from United Launch Alliance (ULA), Lockheed Martin, Virgin Galactic, and Harris Corporation for the conversation centered around the use of artificial intelligence, 3D printing and additive manufacturing.

Governments around the globe including those in Europe, China and of course the United States have accelerated a discussion about sending humans back to the moon as a key step in our continued human exploration of deep space. This concept is also proving attractive to private companies, with an increase in public-private partnerships and a broader role being played by commercial entities in government aspirations.

Former astronaut and Space Station Commander turned venture capital leader Tim Kopra participated in a panel discussion on this very topic alongside representative from United Launch Alliance (ULA), the Federal Aviation Administration (FAA), Lockheed Martin, Deloitte, and the U.S. Air Force. Although Kopra's Blue Bear Capital's primary target are data-driven technologies in the energy industry, he notes that "there are a lot of intersections between energy and aerospace, and Houston's melting pot of global industries has turned the region into a hot bed for innovation with broader application of technologies."

The centerpiece of the Houston delegation's presence at the Paris Air Show was an executive briefing on June 19 featuring keynote remarks from Kopra that helped set the tone for the work Houston continues to do in innovation and aerospace technology. Kopra discussed his background with NASA, the transition into the funding scene that supports the region's growing innovation ecosystem, and what Houston has to offer businesses looking to expand their operations in the areas of aerospace, manufacturing, and digital technology.

A panel discussion followed, addressing topics that included educating the next generation of engineers and explorers, the intersection of NASA technology and the private sector, the next frontier of space exploration and the unique position that Houston has in pioneering those efforts.

"Over the past 58 years, Johnson Space Center has led the U.S. and the world in human exploration, discovery, and achievement in space," Kopra tells the audience. "Now we are in a position of transitioning a lot of those capabilities into the civilian sector."

The Houston Spaceport is one big step in that ongoing evolution. As the only commercial spaceport in the nation centered in a large metropolitan area, the Houston facility will have unmatched access to resources for companies and operators, said Arturo Machuca, general manager of the spaceport.

"The Houston Spaceport is being developed to ensure Houston stays relevant in commercial aerospace and aviation activities," he says. "Houston continues to hold a strong value proposition for companies looking to enter the aerospace industry with a unique set of advantages including the proximity to NASA's Johnson Space Center, unparalleled infrastructure through the Houston Airport System, and a strong talent base."

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Josh Davis is the director of International Investment and Trade at the Greater Houston Partnership and organized the Partnership's participation at the Paris Air Show and gathered the delegation.

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Rice research on bond and stock market differences, earnings variations

houston voices

At the end of every quarter, publicly traded companies announce their profits and losses in an earnings report. These updates provide insight into a company’s performance and, in theory, give investors and shareholders clarity on whether to buy, sell or hold. If earnings are good, the stock price may soar. If they’re down, the price might plunge.

However, the implications for the stock price may not be immediately clear to all investors. In the face of this uncertainty, sellers will ask for high prices, and buyers will offer low ones, creating a significant “bid-ask spread.” When this happens, it becomes more costly to trade, and the stock becomes less liquid.

This is a well-documented effect on equity stock markets. However, according to research by Stefan Huber (Rice Business), Chongho Kim (Seoul National University) and Edward M. Watts (Yale SOM), the corporate bond market responds differently to earnings news. This is because bond markets differ from stock markets in a significant way.

Stocks v. Bonds: What Happens When Earnings Are Announced?

Equities are usually traded on centralized exchanges (e.g., New York Stock Exchange). The exchange automatically queues up buyers and sellers according to the quote they’ve entered. Trades are executed electronically, and the parties involved are typically anonymous. A prospective buyer might purchase Microsoft shares from someone drawing down their 401(k) — or they could be buying from Bill Gates himself.

Corporate bond markets work differently. They are “over-the-counter” (OTC) markets, meaning a buyer or seller needs to find a counterparty to trade with. This involves getting quotes from and negotiating with potential counterparties. This is an inherent friction in bond trading that results in much higher costs of trading in the form of wider bid-ask spreads.

Here’s what Huber and his colleagues learned from the research: Earnings announcements prompt many investors to trade. And on OTC markets, potential buyers and sellers become easier to find and negotiate with.

A Stronger Bargaining Position for Bonds

According to Huber, “When earnings information comes out, a lot of people want to trade. In bond markets, that makes it much easier to find someone to trade with. The more options you have to trade, the stronger your bargaining position becomes, and the lower your trading costs go.”

He compares the process to shopping in a market with a flexible approach to pricing.

“Let's say you're at a farmers market and you want to buy an apple,” Huber says. “If there is only one seller, you buy the apple from that person. They can ask for whatever price they want. But if there are multiple sellers, you can ask around, and there is potential to get a better price. The price you get depends on the number of options you have in trading partners.”

What’s at Stake?

Although bonds receive less attention than equities, the stakes are high. There is about $10 trillion in outstanding corporate debt in the U.S., and more than $34 billion in average daily trading volume.

A detailed record of bond trades is available from the Financial Industry Regulatory Authority (FINRA), which requires that trades be reported via their Trade Reporting and Compliance Engine (TRACE).

The study from Huber and co-authors uses an enhanced version of TRACE to examine trades executed between 2002 and 2020. The team analyzed the thirty-day periods before and after earnings announcements to gather data about volume, bid-ask spreads and other measures of liquidity.

They find that, like on the stock market, there are more investors and broker-dealers trading bonds around earnings announcements. However, unlike on the stock market, transaction costs for bonds decrease by 6 to 7 percent in the form of bid-ask spreads.

What Sets This Research Apart?

“Taking a purely information asymmetry-based view would predict that what happens to stock liquidity would also happen to bonds,” Huber says. “A piece of information drops, and some people are better able to work with it, so others price protect, and bid-ask spreads and the cost of trading go up.”

“But if you consider the search and bargaining frictions in bond markets, you get a more nuanced picture. While information asymmetry increases, like it does on stock markets, the information prompts more investors into bond trading, which makes it easier to find counterparties and get better transaction prices. Consequently, bid-ask spreads go down. This search and bargaining friction does not really exist on equities exchanges. But we cannot ignore it in OTC markets.”

As corporate debt markets continue to grow in importance, it will become crucial for investors and regulators to understand the nuanced factors influencing their liquidity. This study provides a solid foundation for future research.

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This article originally ran on Rice Business Wisdom. For more, see “Earnings News and Over-the-Counter Markets.” Journal of Accounting Research 62.2 (2024): 701-35.

Houston e-commerce unicorn secures $130M in financing

scaling up

Houston-based Cart.com, which operates a multichannel commerce platform, has secured $105 million in debt refinancing from investment manager BlackRock.

The debt refinancing follows a recent $25 million series C extension round, bringing Cart.com’s series C total to $85 million. The scaleup’s valuation now stands at $1.2 billion, making it one of the few $1 billion-plus “unicorns” in the Houston area.

“Scaleup” refers to a startup that has achieved tremendous growth and has maintained a stable workforce, among other positive milestones. Airbnb, Peloton, and Uber are prime examples of businesses that evolved from startup to scaleup.

Cart.com says the new term loan facility from BlackRock consolidates its venture debt into one package “at competitive terms.” Those terms weren’t disclosed.

The company says the refinancing will enable it to expand into new markets and improve its technology, including its Constellation OMS order management system.

“Cart.com is one of the fastest-growing providers of commerce and logistics solutions today, and I’m excited to partner with BlackRock as we continue to aggressively invest to help our customers operate more efficiently,” Omair Tariq, the company’s founder and CEO, says in a news release.

Through a network of 14 fulfillment centers, Cart.com supports over 6,000 customers and 75 million orders per year.

"BlackRock is pleased to support Cart.com as it advances its mission to unify digital and physical commerce infrastructure," says Keon Reed, a director at BlackRock. “This latest facility underscores our confidence in the company’s differentiated product offerings and financial strategy as it enters its next stage of growth.”

Elon Musk says he's moving SpaceX, X headquarters from California to Texas

cha-cha-changes

Billionaire Elon Musk says he's moving the headquarters of SpaceX and social media company X to Texas from California.

Musk posted on X Tuesday that he plans on moving SpaceX from Hawthorne, California, to the company's rocket launch site dubbed Starbase in Texas. X will move to Austin from San Francisco.

He called a new law signed Monday by California Gov. Gavin Newsom that bars school districts from requiring staff to notify parents of their child’s gender identification change the “final straw.”

“I did make it clear to Governor Newsom about a year ago that laws of this nature would force families and companies to leave California to protect their children,” Musk wrote.

Tesla, where Musk is CEO, moved its corporate headquarters to Austin from Palo Alto, California in 2021.

Musk has also said that he has moved his residence from California to Texas, where there is no state personal income tax.

SpaceX builds and launches its massive Starship rockets from the southern tip of Texas at Boca Chica Beach, near the Mexican border at a site called Starbase. The company’s smaller Falcon 9 rockets take off from Cape Canaveral, Florida, and Southern California.

It’s just below South Padre Island, and about 20 miles from Brownsville.