Investing in space-related companies has become light-years more interesting as the industry is expected to defy gravity with growth forecasts that were once unimaginable. While the full scope of possibilities may be infinite, the current known potential for space becoming a trillion-dollar industry is very real.
According to Morgan Stanley (NYSE:MS), the space industry is poised for a meteoric rise, reaching a staggering $1 trillion in revenue by 2040. This opens up a universe of investment opportunities for those eager to explore this exciting new frontier.
A Universe of Opportunity
While space tourism ignites the imagination, the investment opportunities for investors to discover extend far beyond exclusive vacations with expensive seating. In addition to rockets, there is an entire infrastructure, both on land and in space, to be built.
Launch services for satellites are growing in demand. Rocket Lab (NASDAQ:RKLB) is a leader in developing smaller, more affordable rockets specifically designed for launching satellites. This capability is crucial for expanding global internet access, environmental monitoring, and scientific research in space.
Building space infrastructure is likely to always be an ongoing effort. Companies like L3Harris Technologies (NYSE:LHX) just received a U.S. Space Force contract worth up to $187 million for the modernization and sustainment of critical space infrastructure, allowing military domain awareness. More recognizable companies like Boeing (NYSE:BA), which is clearly not a pure play in this sector, develop tracking and data relay systems to facilitate communications between orbiting spacecraft and the ground.
Then there is actual extraction from space, including mining, with the aim of pushing the boundaries of exploration and bringing minerals to Earth from far beyond. Intuitive Machines (NASDAQ:LUNR) falls into this category, specializing in moon exploration and extraction.
Then there is recreational space travel. Imagine weightlessness and witnessing the breathtaking curvature of Earth from just beyond Earth’s atmosphere. This dream, once relegated to science fiction, is hurtling towards reality. Companies like Virgin Galactic (NASDAQ:SPCE) are at the forefront, developing spacecraft and experiences that are expected to usher in an era of space tourism.
The potential market for this experience is massive, with Morgan Stanley’s prediction highlighting the immense potential for companies at the forefront of this revolution.
Stocks involved in the space movement don’t all trade as a group. This is where the TipRanks Comparison Tool is especially useful. The Analyst Price Target ranges from an upside of 9.32% for the lowest to 105.19% for the company that analysts are most optimistic about.
Risks of Investing in the Great Unknown
The space industry is undeniably exciting, but it has barely taken flight. Investors venturing into this arena should be aware of the inherent challenges. These include the high cost of developing space technologies that may not work as planned initially. This requires substantial funding. For this reason, companies may require significant investment before becoming profitable. Investors would need patience and a long-term perspective.
How many space lawyers do you know? The legal framework surrounding space activities is still being established. Regulatory changes could impact companies’ operations and bottom lines, requiring investors to stay informed about legal developments.
Also, technological hurdles and setbacks are expected as space exploration and development are full of estimates and unknowns. Technical setbacks and delays are a possibility, necessitating a high tolerance for risk from investors.
Key Takeaway
The potential rewards of space exploration and space tourism are undeniable. However, careful research and due diligence are paramount for investors.
Analyzing a company, its plans, technology, leadership team, and competitive landscape is essential before making any investment decisions. The space industry offers a multitude of opportunities, but like any investment, it requires a calculated approach that acknowledges both the inherent risks and the potential to lift off.
