The trillion dollar space race gathers pace

Thought of the day

by Chief Investment Office 12 Apr 2019

In a significant milestone for the commercialization of space, the Falcon Heavy rocket delivered its first paid payload to orbit on 11 April. The launch of the rocket, reportedly the most powerful flying vehicle in operation, was capped by the successful return to earth of its reusable boosters and center core stage.

SpaceX is just one of several private companies at the forefront of this new private space economy, which we believe will yield significant opportunities for global investors:

  • The Trump administration has tasked NASA with returning to the moon by 2024. This will require significant government investment and spending, bolstering the commercial feasibility of private efforts.
  • New economy billionaires, backed by private capital raising, are investing heavily in space technology. This investment is already leading to a virtuous cycle; reusable rocket tech will encourage higher utilization rates, bringing a larger number of advanced satellites to space for less money, and in turn shortening the innovation cycle.
  • The race to lock in first-mover advantage in emerging space opportunities, such as low earth orbit internet satellites, will lead to rapid capital spending and innovation gains across the satellite manufacturing supply chain.So growing momentum for the sector should see the space economy expand from USD 340bn currently to almost USD 1trn in the next couple of decades. At this early stage, we prefer existing listed companies in the aerospace, satellite and communications segments. New space start-ups may offer investment opportunities in private markets. For more details on our views, please see our Long Term Investment theme on space.

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