(Bloomberg) — Space and satellite-related stocks soared Tuesday as investor enthusiasm around the industry intensified.
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Growing excitement around the burgeoning space economy is increasingly favoring companies positioned to benefit not only from Elon Musk’s SpaceX filing for a public offering, but also from rising enthusiasm for space exploration and increased funding. On Tuesday, NASA picked Jeff Bezos’ Blue Origin and other firms to jump start its lunar base program.
Shares of space infrastructure company Redwire Corp. closed up 26% to $22.04 in New York, and satellite broadband communication company AST SpaceMobile Inc. rose 13% to close at $119.70. Canadian satellite and robotics firm MDA Space Ltd. climbed 4.9% to end the trading session at C$61.82.
“The SpaceX IPO is drawing more investors and attention to other well positioned companies in the space industry,” Andres Sheppard, an analyst at Cantor Fitzgerald, wrote in a note to clients. Sheppard also sees space transportation company, Rocket Lab Corp., Intuitive Machines Inc. and Satellogic Inc. “as direct beneficiaries.”
Rocket and spacecraft maker Firefly Aerospace Inc. rose 19% to close at $58.81, after NASA selected its Elytra spacecraft to deliver four drones to the moon as part of the agency’s Moonfall mission.
Meanwhile, shares of Intuitive Machines quickly pared gains and fell Tuesday, ending the trading day down 8.9%, after the company was not selected by NASA to build lunar terrain rovers for the agency.
Intuitive Machines Chief Executive Officer Steve Altemus said in a statement that NASA’s lunar terrain vehicle is not a one-time mission and the company will “pursue additional opportunities as NASA expands lunar surface operations.”
A Bank of America Corp. basket of US companies that are key players and potential beneficiaries of the space race has climbed 57% this year, according to data compiled by Bloomberg. On Tuesday, the gauge posted its biggest one day gain since April of last year. Meanwhile, the Procure Space ETF (ticker: UFO), a fund with a market value of about $1 billion, has gained about 69% so far this year.
Both are far outpacing a 9.8% gain in the S&P 500 Index and an 19% advance in the Nasdaq 100 year-to-date.
Analysts and investors expect the global space economy to continue to expand. SpaceX is expected to benefit from the US Space Force’s 2027 budget, which is advancing toward $71 billion and jumped 78% from a year ago, according to Bloomberg Intelligence analysts Wayne Sanders and George Ferguson. Other “dual use” space companies including Black Sky, Firefly and Umbra, are also “positioned to potentially benefit from funding increases,” they added.
The broad space cohort is seen capturing trillions of dollars of economic growth over the next two decades, disrupting and growing multiple terrestrial industries, New Street Research analyst Pierre Ferragu said in a May 13 report.
The sector has seen its fair share of space-focused IPOs in recent years — including York Space Systems Inc., which made its market debut in January, as well as earlier entries such as AST SpaceMobile and Intuitive Machines.
SpaceX’s offering could take place as early as next month, and it is targeting to raise as much as $75 billion. In early April, the company was reported to be aiming for an IPO valuation of above $2 trillion, according to people familiar with the matter.
And as the rally continues, so will the risk of stocks in this sector, according to Eric Sterner, chief investment officer at Apollon Wealth Management, adding that many of these companies are “unprofitable and their valuations are already rich.”
“While there are some geopolitical tailwinds behind this sector as defense contractors and governments are increasing their defensive spending, I would caution investors to maintain smaller allocations to very speculative area of the markets,” Sterner said.
(Updates shares for market close throughout. Adds NASA award news in the 2nd, 5th and 6th paragraphs as well as Intuitive Machines CEO comments in the 7th paragraph.)
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