From Apollo to SpaceX: The Dawn of a Secular Space Boom

From Apollo to SpaceX: The Dawn of a Secular Space Boom

The last human moon landing occurred more than 50 years ago when NASA’s Apollo 17 mission touched down on the lunar surface, and U.S. astronauts Eugene Cernan and Harrison Schmitt collected samples and conducted experiments. Why has it been so long since? The answer depends on who you ask. Perhaps the reason was a lack of interest after the space race, or maybe it was NASA budgetary issues due to an expanding U.S. fiscal deficit.

Despite these challenges, a scrappy 2002 start-up called Space Exploration Technologies (SpaceX) would change the course of history. Out of necessity, Elon Musk and his team worked backward from a first-principles framework to drastically reduce costs. Additionally, through years of hard work, the SpaceX team achieved the holy grail of rocketry – reusability. Reusability is a game-changer for space travel because it allows for more frequent travel and makes space travel far more affordable and efficient.

Why the Space Industry is Entering a Secular Bull Market

In the past, space endeavors required only two things: a large enough budget and enough interest. However, for private space companies to thrive, capitalism and profits are a non-negotiable.

Earlier this month, SpaceX Founder and CEO Elon Musk confirmed rumors that SpaceX will go public next year and seek a $1.5 trillion valuation. If SpaceX is to garner a $1.5 trillion valuation, it would make the IPO the largest in history, and it would act as a proof of concept for private space companies and would likely spur investment across the industry.

Unpacking the Space Economy

Below are three emerging segments of the space economy for investors to monitor:

·       Data Centers: The recent spending spree from big tech juggernauts on AI data centers is unprecedented. For these deep-pocketed companies, the roadblock is not money, but instead a lack of energy. From this perspective, space has notable advantages over Earth. In space, satellites can absorb the sun 24 hours a day (and the sun is ~30% more intense). Meanwhile, cooling these space data centers is far less complicated than on Earth. A company would simply need to put a radiator on the dark side of the satellite. Recent comments suggest that Elon Musk, Alphabet (GOOGL), and Amazon (AMZN) are racing to deploy the first data centers in space.

·       Broadband Internet: Earth has an unquenchable thirst for more internet and more bandwidth. Space-based internet improves performance and has no dead spots like legacy internet. AST Space Mobile (ASTS), Globalstar (GSAT), EchoStar (SATS), and Viasat (VSAT) are four leaders to watch in this space vertical.

·       Earth-Imaging Satellite: Low-orbit satellite providers such as Planet Labs (PL) provide daily images of the entire planet to industries like agriculture, defense, and environmental mapping. Unlike many space companies, PL is profitable. Last night, PL reported its fourth consecutive profitable quarter. Thursday, PL shares bolted more than 30% in mid-day trading.

Bottom Line

After decades of stagnation, the space industry is finally entering a true secular bull market – driven by innovation, profitability potential, and commercial demand. SpaceX’s rapid progress and potential record-setting IPO will serve as the spark that accelerates investment across the sector.

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