In Focus: Space Investing in 2021
In June of 2019 I wrote about investing in space, you can read it about here. At the time the post got very little attention, and those that did pay attention thought it was way out there as a concept. Fast forward two years and now space seems to be on everyone's tongue.
Over the past week we saw two major space stories making headlines. CNBC reported that Jeff Bezos' Blue Origin is getting close to selling tickets for its space tourism rocket. We also had SpaceX in the news after the company's rocket returned four astronauts from the international space station. The SpaceX rocket Resilience safely returned to earth in the early morning hours of May 2nd.
Jeff Bezos is following Richard Branson, whose Virgin Galactic (SPCE) space company has been rumored to have sold nearly 600 tickets for it's space tourism rocket. SpaceX meanwhile appears to be continuing what NASA started.
For investors, we're still in the early stages of the new space race. In a UBS report published last year, analysts estimated that space tourism could grow into a $3 billion market by 2030, and that high-speed travel via outer space could represent an annual market of $20 billion.
What I've tried to convey to investors over the past two years is that space isn't just NASA and the other space organizations of the economically elite countries of the world. Space exploration has become a private business with broadening investment opportunities.
My focus has been in satellite manufacturing and telecommunications, as I have a strong conviction that satellite communications is going to turn cell phone service upside down over the next 10 to 20 years.
The Satellite Industry Association reported that the global space economy brought in $366 billion in 2019, up from the $277 billion recorded in 2018. Satellite manufacturing accounted for $12.5 billion of 2019's space related revenue.
I continue to keep an eye on names like Ball (BALL), Thales (THLEF), Viasat (VSAT), Eutelsat Communications S.A. (ETCMY), Globalstar (GSAT), and Lockheed Martin (LMT), either for a pull back in their stock prices or improved financials.
Rocket Labs, a company I wrote about in the last space piece had aggressive plans to launch a rocket a week by 2020, and while not there yet, the company's Electron rocket has carried more than 100 small satellites to orbit over the past few years. The Silicon Valley space unicorn has announced that it plans to go public by way of a SPAC merger sometime in Q2 2021.
For investors who prefer ETFs to individual stocks, there's the Procure Space ETF (UFO) and ARK Space Exploration & Innovation ETF (ARKX), both of which are geared towards investing in companies with exposure to space related industries.
The new space race is heating up, and investors would be wise to start accumulating shares in good companies with exposure to the space industry.
I would warn investors to not make space tourism the main focus. While space tourism will contribute to the $805 billion market that the space industry is expected to reach by 2030 according to USB, space tourism is the low hanging fruit. Telecommunications, remote censoring, travel, and national defense are some of the other areas that will be impacted as we send more people and things into space.