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Monday, September 20, 2021

How Investors Can Join The SpaceX, Blue Origin, and Virgin Galactic Hype

The successful spaceflights of billionaires Richard Branson and Jeff Bezos have drawn quite a bit of attention to the space industry. A journey into space of your own will probably remain unaffordable for most people for the foreseeable future, but with an investment in the future industry you can at least bring space into your own portfolio.

• Well-known space companies such as Blue Origin or SpaceX are not accessible to private investors
• Listed companies cover various areas of space travel
• Investment in the industry is also possible via ETFs

Space tourism has made some headlines in recent weeks: First , Virgin Galactic CEO Richard Branson took off on a short trip into space in July , and then just a few days later Jeff Bezos completed a space flight that lasted just a few minutes on board a spacecraft belonging to his company Blue Origin . SpaceX founder Elon Musk has also been planning a Mars mission for years talk about yourself. But anyone who thinks that space is reserved for the super-rich is wrong. Although space flights are likely to remain unaffordable for mere mortals for a long time due to the immense prices, with an investment in the space industry everyone can at least metaphorically be part of the journey to the stars. Although Blue Origin and SpaceX, two of the most well-known space companies, are not listed on the stock exchange, there are numerous other listed companies that specialise in space travel and many more that are involved in at least one business area in space. Space tourism only accounts for the smallest part, because other areas of space travel are currently in demand and are lucrative.

Space stocks: Much more than Virgin Galactic

As the winner in the race of billionaires into space, Richard Branson can look forward to some publicity for his space company Virgin Galactic . The company went public on the New York Stock Exchange in 2019 with the help of a SPAC, but has not yet been profitable. Investors hardly seem to mind: Since the beginning of the year, the paper has grown by almost 30 percent (as of July 26, 2021). Most recently, however, the news that Virgin Galactic is being sued for incorrect accounting , as well as an announced capital increase for clear setbacks. Those familiar with the stock market are also skeptical about the Virgin Galactic share: “The share has already been proudly priced and is only suitable to a limited extent as a speculative collector’s item,” said the author Marc Friedrich, known for his business books, to “Business Insider”. Capital market expert Christian W. Röhl also waved off the share in an interview with the news portal. “I also don’t believe that there is a sufficiently scalable market for space tourism at this level. In this respect, the share is not an investment for me,” was his assessment.
But investors who want to invest in space through listed companies have a few other stocks as interesting options. According to “Capital” satellite manufacturers are a less speculative space investment. According to the business magazine, analysts see upside potential for satellite companies in the medium term, since more and more communication equipment is required in space and it should also become cheaper to shoot satellites into space. The result should be rising margins for satellite manufacturers.

In this area, a German company is also involved in the very big ones. According to “Capital”, the family-run company OHB from Bremen is one of the top three contractors for the European space agency ESA. The group deals with satellite development, construction and operation, data transmission and processing as well as the development and construction of scientific payloads and aerospace structures. The OHB subsidiary MT Aerospace recently received an order to develop a prototype for an optimized upper stage of the European Ariane 6 launcher . In 2020, OHB generated a consolidated net profit of EUR 20.9 million, so it is profitable. In addition, the company can boast full order bookseven though the invitation to tender for the new generation of Galileo navigation satellites came out empty-handed . So far, however, the OHB share has not been a high-flyer: it has been generally trending sideways for several years.
Another satellite manufacturer is the US group Maxar Technologies , whose share price has been under pressure since the beginning of the year and has fallen by 9.5 percent on the NYSE (as of July 26, 2021). Maxar Technologies has been making losses so far, but received an order from NASA to develop the drive system for the Lunar Gateway space station, which will serve as a kind of transfer station for astronauts in the future. According to “Business Insider”, analysts at the banks Morgan Stanley and Goldman Sachs see growth potential in Maxar Technologies and recommend the share as a buy.

Established companies are also involved in space

In addition to companies whose business is focused on space, there are also several other companies that have at least one space division and could therefore also be of interest to investors looking for a space investment. One of these large corporations is the aerospace company Airbus , which, in addition to aircraft, also builds satellites, propulsion systems, space equipment and electronics for space platforms. In addition, Airbus has together with the Italian-French company Thales Alenia Space, which is part of the Thales Group and part Leonardowas awarded the contract for the new generation of Galileo satellites, which OHB had missed. Airbus is also involved in the construction of the Ariane 6 launcher. The analysts are also positive about the Airbus share: of 14 analysts recorded by finanzen.net, ten recommend the title to be bought, the remaining four vote “Hold”. The average price target of the analysts is EUR 126.23, the Airbus share last cost EUR 112.22 on XETRA (as of: closing price on July 26, 2021).
Also, Boeing and Lockheed Martin earn on Space hype. According to “ETF Nachrichten” Lockheed Martin already generates a fifth of its sales with the space division and is expanding the business even further. Boeing is also working on the CST-100 Starliner, a manned and reusable spaceship.

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ETFs also offer access to space

In addition to individual stocks related to space, ETFs also offer an opportunity to invest in the future industry. Author Marc Friedrich even described a broadly diversified investment via an ETF as the better choice compared to “Business Insider”. For example, the ARK Space Exploration & Innovation ETF from Cathie Woods ARK Invest can be considered. In addition to shares in the aforementioned companies Boeing, Thales and Lockheed Martin, this also contains technology stocks such as Amazon , Alphabet or Netflix , which actually have nothing to do with space. For this, the ETF has already been sharply criticised by the well-known US moderator Jim Cramer. “It’s ridiculous, but there aren’t enough real space-related stocks to make a decent ETF,” Cramer told CNBC. He recommended Cathie Wood not to launch a space ETF “if you have to bolster it with Netflix and Deere “.
Recently, however, the Procure Space ETF became the first space ETF to be listed on the German stock exchange. The ETF invests in 30 companies in the fields of satellite construction and operation, rocket construction and operation, satellite-based telecommunications, and space-based image and intelligence services. In addition, the ETF wants to offer early access to companies that benefit from space tourism. Only one fifth of the underlying index may consist of companies that generate less than half of their income from space travel. It should therefore offer a somewhat more pure investment in the space industry than Cathie Wood’s ETF. Whether this will pay off on the stock market in the long term cannot be said at the moment, as the Procure Space ETF has only been trading for a few weeks. However, investors should be patient with all investments in the space industry

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