The New Space Race and Opportunities for Profit

Apr 12, 2021

Space exploration today is a long way from the US vs USSR space race in the 1960s. While America and the Soviet Union competed for national pride and military advantage, the new space race is founded on technological advances and economic opportunities. It is no longer a competition only between the two superpowers, but now involves several fast-growing economies including India, China, and Japan.

Yet, the new space race isn’t only a contest between major world powers – it is also a contest between private individuals. Since the early 2000s, several billionaires have expressed interest in the space industry and began working on space projects. In other words, because the companies are privately-owned (as opposed to state-controlled agencies), there is more opportunity for profit.

Historic Overview

Today, April 12th marks exactly 60 years since cosmonaut Yuri Gagarin became the first human ever to travel into outer space.  His capsule, Vostok 1, did a single orbit around the Earth, forever etching Yuri Gagarin into our minds and solidifying a major milestone in the space race.

Less than a decade later, in 1969, Apollo 11 saw the first successful manned mission to the Moon. The lunar landing expedition, led by astronauts Neil Armstrong and Buzz Aldrin, cemented the USA’s victory in the space race.

Since then, a new rivalry has dawned – the billionaire space race.  Unlike the initial space race, this is a competition between privately-owned companies that have penetrated the space industry. These companies are led by billionaires, most of whom established their wealth during the dot com boom.

The billionaire space race includes:

  • Entrepreneur Elon Musk, as the CEO of SpaceX with a mission to colonize Mars.
  • Amazon founder Jeff Bezos, leading Blue Origin on a mission to industrialize space.
  • UK’s Richard Branson of Virgin Galactic, aiming to dominate the space tourism industry.

One of the greatest advantages of the billionaire space race is that it’s run by the private sector, as opposed to the national sector, enabling private investment opportunities.

Today’s Overview

As far as the billionaire space race goes, there are numerous developments scheduled for the next couple of years. Since NASA (National Aeronautics and Space Administration) scrapped its space shuttle program in 2011, the agency has depended on Russia to ferry astronauts to the ISS (International Space Station). But that changed in 2020 when SpaceX successfully launched its crewed mission. SpaceX has not only taken Russia’s place as the transporter of American astronauts but even gone a step further to flying civilians.

Besides SpaceX, Boeing has also been busy working on a capsule for astronauts called the Starliner which may be flying astronauts to the ISS later this year. On the other hand, Blue Origin aims to set up a base on the moon’s south pole.

How can I invest in space programs?

One of the easiest ways to invest in space programs is by investing in stocks in space-oriented companies. Here’s a list of some of the most popular space companies:

  1. Virgin Galactic (SPCE)

Led by Sir Richard Branson, the company began trading on NYSE (New York Stock Exchange) in 2019 with plans to offer commercial space flights in 2020. Each ticket cost $250,000 but that didn’t prevent some 603 customers from paying deposits and prebooking. The timeframe has naturally been affected by the COVID-19 pandemic, but the company vision hasn’t changed.

Not to mention that Virgin Galactic has been around for almost two decades, during which it grew to have a market cap of $7443 billion at the time of writing.

 

“For the first time, anyone will have the opportunity to invest in a human spaceflight company that is transforming the market,” commented CEO George Whitesides.

  1. SpaceX

While the company has no intentions of going public yet, Elon Musk’s charge has made it the most active US rocket launcher. In line with the CEO’s views, SpaceX has managed to reduce the cost of launching and reuse valuable rocket parts. Its Dragon Spacecraft has made 23 visits to the ISS so far, capable of transporting both humans and cargo. With dreams of self-sustainable cities on Mars, there’s no telling where this company could take our civilization.

Because Space X is not publicly traded, the only way one can invest in the company now is by investing in Alphabet stock (GOOGL). This is because Google owns a $900 million stake in SpaceX as of 2015. Although not ideal, this investment opportunity also comes with the added advantage of stakes in Google, YouTube, Android OS, etc.

 

  1. Blue Origin

While Blue Origin has yet to fly people to space, in November 2015 the company launched its New Shepard launch system into space and successfully landed it back on Earth. Moreover, Blue Origin is a member of a group that has been awarded NASA contracts for its Artemis program. The group consists of Blue Origin, Lockheed Martin (LMT), and Northrop Grumman (NOC), and Draper.

“I am excited to announce that we have put together a national team to go back to the moon,” said Jeff Bezos during an interview at the 70th International Astronautical Congress.

There have been no indications that Jeff Bezos will take Blue Origin public however investing in its parent company, Amazon (AMZN), shouldn’t feel like a let-down considering that its market cap is currently valued at $1.698 trillion.

 

 

  1. Boeing (BA)

Although the brand has become popular for its earthbound commercial aircraft, Boeing is the main contractor for NASA’s Space Launch System. It is also the developer behind Starliner, which is a capsule that will fly astronauts to orbit. The company has been trading on NYSE since 1962 and has a market cap of $147.287 billion at the time of writing.

 

To Sum Up

One of the reasons everyone is obsessed with space is the hope that another visit to the moon would yield new insights and ideas. When the first moon landing occurred in the 60s it was followed by huge innovations in aerospace and general technology. Naturally, the hope is that new ventures would lead to new developments in areas such as radiation shielding, and discoveries of rare minerals that can be mined.

Another reason for space exploration is the environmental factor. It is becoming increasingly difficult for our planet to sustain a population of 8 billion, especially since our daily habits create massive carbon footprints and general pollution. Entrepreneurs like Elon Musk believe that planet Earth will become uninhabitable and aim to take our civilization to another planet to continue existing.

Regardless of the reason, over $24.6 billion in private capital have been invested into space companies, making it a huge market bursting with potential for profit.