Space stocks have been on a wild ride this year. Many, if not all, rose by 50% to 100% at the peak, if not more, only to fall back to earth once the SpaceX (NASDAQ: SPCX) IPO was completed. Yes, we can blame this sharp reset in space stock values on SpaceX, not because of any underlying failure, but simply due to hype. SpaceX is cool; it has an eccentric, headline-making CEO and unlocked the floodgates of institutional space investing. What it does not do is make space an advanced sector, or one that profits. Pockets of profitability exist; SpaceX’s Connectivity segment, which includes Starlink, is one, but they are few and far between. It will take some time for these stocks to fully recover.
The opportunity in space today is to pick up the pieces left by the SpaceX IPO and put them back together into a portfolio of winners. Space is valued at approximately $650 billion as of late August and is expected to grow at a modest single-digit CAGR over the coming years. Growth will be driven by declining launch costs and constellation demand, with commercial applications making up the bulk and defensive applications a large but still minority share. Commercial space stations and manufacturing platforms could soon take the place of existing infrastructure (which is limited) and open new paths to revenue and profits.
