Ark Invest manages the largest actively managed Exchange Traded Fund in the World. So when they announced they were going to be launching (every pun intended) a space exploration ETF (ARKX) space stocks naturally took off (every pun intended). But who are these brave space travelers who will go where no man has gone before? And why are they putting their money where no man has really spent that much time? What’s in it for them? Though with the state of the planet’s climate crisis and overpopulation I can imagine man – those with the bucks – might one day need an alternative planet to colonize.
Let’s take a look at several:
Virgin Galactic (NYSE: SPCE): If Richard Branson, CEO of this company, gets his wish space tourism for the rich and ‘been there done that crowd’ – as I like to call them – will be going on junkets into outer space rather than the Caribbean sometime in the not too distant future. This could be the year that Branson himself is flown out into the cosmos for a test flight of his own. If the space tourism business scales it could realize millions, if not billions, of dollars in profits. Not too shabby for those who just don’t want to visit the same old Mayan ruins, Great Wall of China, or think those pristine beaches around the world are just too horse-and-buggy. How boring!
Maxar Technologies (NYSE:MAXR): Now this company knows space! They have been around since Neil Armstrong landed on the Moon. For those of you who were not born when man landed on the moon here is a refresher:
“On July 20, 1969, American astronauts Neil Armstrong (1930-2012) and Edwin “Buzz” Aldrin (1930-) became the first humans ever to land on the moon. About six-and-a-half hours later, Armstrong became the first person to walk on the moon. As he took his first step, Armstrong famously said, “That’s one small step for man, one giant leap for mankind.”
By the way, Woodstock was a few weeks later. We are experiencing a renaissance all over the place. Inner cosmos and outer. Hint, hint.
So Maxar has had a few setbacks but they have downsized and are now focusing their business on their strengths: Earth Intelligence and Space Infrastructure.
The company already has an existing satellite network that is already rotating the earth, they can boast a healthy space infrastructure production capacity, and they have made a huge investment into 5G and autonomous driving technology which drives demand for their space-tech solutions.
“Meanwhile, autonomous driving technology requires granular, 30-centimeter imaging data — the likes of which only Maxar can produce thanks to its existing constellation of imaging satellites. Demand for this granular imaging data will explode higher over the next decade.”
Momentus: (NASDAQ: SRAC): Ever wonder how the smaller ships get from the mother ship to another ship or to a satellite station? They need transfer vehicles. Enter Momentus, which is coming public via special acquisition company, Stable Road.
“I like to think of Momentus as a space mobility company. It builds what are called “transfer vehicles,” which enable devices to move throughout space. These transfer vehicles help satellites — once detached from the main rocket — get into their final destination orbits, switch between orbits and return to a spaceship.”
This company is building the technology upon which things move in space. You can’t go somewhere if you can’t get somewhere.
“Its transfer vehicles are built on the back of a patented and proprietary water plasma propulsion technology platform that is the cheapest and most efficient mechanism for maneuvering in space.”
SpaceX has chosen Momentus as its space vehicle supplier. For those of you who don’t know what SpaceX is, it’s Elon’s Musk’s (Tesla, the really nice electric car) private aerospace company founded in 2002.
“The space services company designs and manufactures spacecraft, rockets, satellites and offers a “rideshare” service — an opportunity for private citizens to reserve a space flight that costs upwards of $1 million, according to the company’s website.”
Now there are two names that we know from the defense industry also getting in on the space action: Lockheed Martin (LMT) and Northrop Grumman (NOC).
And Aerojet Rocketdyne makes rockets.
“In fact, Aerojet Rocketdyne is making the most powerful rocket NASA has ever built: the Space Launch System (SLS), which is designed to take humans further into space than ever before.”
Now Northrop Grumman is in business as a defense contractor including building launch boosters for NASA programs and a contract for an intercontinental ballistic missile system.
“But a newer development this year was the success of the company’s Mission Extension Vehicle (MEV), which refuels satellites in space and returns them to operational status — an excellent way for Northrop Grumman to bill itself as a provider of essential, life-extending services to other space-faring companies.”
Nokia: (NOK): Nokia – yes the same company that makes phones and other consumer devices – has landed a contract with NASA.
“The idea is for Nokia to establish a 4G cellular network in order to facilitate communications among astronauts on the moon as part of NASA’s Artemis program — the goal of which is to land another astronaut on the moon by 2024.”
Iridium Communications (IRDM): This communications company is staying a little closer to home taking advantage of the growing sector of the Internet of Things (IoT) by providing a network of 66 low earth-orbiting satellites to customers all over the earth with voice and data connectivity.
Exchange Traded Funds are good places to park your money when you don’t have the stomach to invest in individual stocks but want to take part of the action. And there are already space ETFs:
Procure Space ETF (UFO): “Procure Space invests 80% of the fund into companies that derive “at least 50% of their revenue or profits from one or more segments of the space industry” — in other words, it’s not just an exchange-traded fund filled to the brim with defense contractors and aerospace companies.”
SPDR S&P Kensho Final Frontiers ETF (ROKT): The majority of the stocks (65%) in this fund are focused on the aerospace and defense sector. They include old standbys like Maxar Technologies, Lockheed Martin, and Honeywell International.
I suspect as space is infinite the possibilities for investment in this new frontier will continue to expand so in the words of my favorite StarFleet commander: “Live Long and Prosper”.
“In the bigger picture, the new ARKX space exploration ETF is just one reason in an increasingly long list of reasons why space stocks are some of the best stocks to buy in 2021. Other reasons public investor interest in space will increase significantly include the following: a flurry of space company initial public offerings (IPOs) over the next 12 months, multiple successful flights from SpaceX and others drumming up mainstream enthusiasm, and technological advancements in 5G and AI unlocking new capabilities in this still very nascent industry.”
Author: Sherri Margolin (Dark Matters)