The space sector is poised for a decades-long crescendo, driven by plummeting costs and government backing. This shift has opened up new markets for small satellites, which are cheaper and faster to produce than traditional satellites.
According to private equity deals, the number of space-related transactions has multiplied 4.8x since 2015, with venture capital making up 80% of private investment in the sector. Small satellites, weighing less than 500 kilograms, will dominate upcoming satellite launches.
The commercialisation of space is expected to hit US$1 trillion by the 2030s, according to global projections. The US, India, and other countries are pouring billions into space development, creating new opportunities for companies like SpaceX and Blue Origin.
Advancements in launch costs have brought prices down from tens of thousands per kilogram to the low hundreds. Soon, it could be in the tens of dollars per kg. This has sparked a new space boom, with tourism, manufacturing, and mining expected to inhabit the night sky in the coming years.
Despite high risks and volatility, companies like SpaceX are receiving government backing for lunar missions through NASA’s Artemis program. This has trickled down to smaller public companies making everything from specialist titanium parts to advanced solar arrays and cameras.
Investors can catch this rocket ship by examining space stocks that are still cheaply priced, especially in the small-cap sector. Two examples include Redwire [NYSE:RDW] with valuable IP in solar power generation and in-space 3D printing, and MDA Space [MDA:TSX], which has a US$5 billion contract backlog thanks to deals with Apple and Globalstar.
As the cycle moves up, it’s essential to conduct due diligence on space stocks, as technical challenges are real and high-risk. However, with government backing and trillion-dollar projections, the market can be more forgiving of occasional setbacks.
Source: https://daily.fattail.com.au/space-stocks-the-next-frontier/20250120