Space industry - investor's guide

On August 25, the space industry will again attract media attention with the launch of the New Shepard by Blue Origin. This time it will be an unmanned flight. The space business is worth around $ 400 billion, but is growing rapidly - forecasts predict an increase from 50 to 400 percent. by 2030.

In recent months, space tourism has remained on the top. Twenty years after Denis Tito paid $ 20 million for a visit to the International Space Station, tourists have returned to space. In July, they recorded their first successful tourist flights Virgin Galactic (Richard Branson's company) i Blue Origin (company of Jeff Bezos). Interestingly, in both cases the owners themselves - Branson and Bezos - were on board. This shows that they have strong faith in their endeavors, and that the risk has been greatly reduced and the developed technologies are already very close to commercial exploitation. Branson flew to a height of over 80. km, and Bezos even higher - crossing the unofficial border of the cosmos lying at 100 thousand. km Karman line.

About the author

Pawel Majtkowski - analyst eToro on the Polish market, which shares its weekly commentary on the latest stock market information. Paweł is a recognized expert on financial markets with extensive experience as an analyst in financial institutions. He is also one of the most cited experts in the field of economy and financial markets in Poland. He graduated from law studies at the University of Warsaw. He is also the author of many publications in the field of investing, personal finance and economy.

How were these events perceived by the market? Virgin Galactic is the only publicly traded space tourism company. Since the Branson flight on 11.07/50, its shares have fallen by more than 24,5 percent. and are currently trading at $ XNUMX. This is primarily the result of high expectations, not only as to the success of the take-off itself, but also as to the quick start of commercial flights with paying passengers. In August, the postponement of their start to the end of 2022 was announced, which was perceived badly by the market and contributed to the sell-off of shares. The decline was also caused by the fact that Branson himself sold the company's shares worth $ 300 million after a successful flight. This example is a great investment lesson for anyone and shows that stock markets measure success against prior legitimate (or not) expectations.

Elon Musk and SpaceX

There is also a third billionaire who needs to be watched in the context of the conquest of space - Elon Musk. His company SpaceX (valued at over $ 70 billion) chose a different path, focusing on the commercial delivery of cargo into space. It is also investing in the Starlink network - consisting of 1700 satellites located in low orbit to provide Internet access anywhere. The company already has 100. test users and is planning an IPO. SpaceX is much closer to the traditional space business because, like Boeing builds large space ships and rockets, it creates a satellite communication system similar to Iridium and space imaging as Maxar.

Let us also not lose sight of the more ambitious goal of man's return to the moon and the flight to Mars. It will be a huge engineering and financial effort, but we will feel its effects for decades. Usually, we do not realize how much influence the United States' implementation of the Apollo program had on the development of mankind in the 60s. Many technologies developed for its needs brought a huge technological leap. For example, the Internet, for which it was necessary to develop advanced satellite connectivity, and the development of commercial telecommunications satellites was done by engineers who joined the business after the Apollo program ended.

It seems that the current ambitious program of the "second" conquest of space will also bring us a leap in technological development. The more that we are already in a different place, and each of our smartphones has a processor thousands of times faster than the processors that were used in the devices used during the Apollo 11 mission. Now, not only individual countries have set off to conquer space by their space agencies, but also companies commercial. This could mean that even more technologies will be developed that can be used beyond the space industry, which can bring growth in many other sectors.

Earn in space

There is no doubt that further conquest and expansion into space are inevitable. This time, the participation of commercial ventures gives investors a potentially greater opportunity to participate and earn from this process. However, one should remember about the inherent risk in the space business, which should encourage us to diversify as much as possible. While Virgin Galactic is the only listed space tourism company, there are a small number ETFs space-oriented, the largest of which is the active ARK Space Exploration and Innovation ETF. We can also obtain greater, wider and cheaper exposure to the space sector through the iShares US Aerospace & Defense ETF, which has the largest players in the sector in its portfolio, such as Raytheon, Boeing and Lockheed Martin.