Have you ever looked up at the night sky and wondered what’s out there? If so, you’re not alone. Space is fascinating, and it has captured the imagination of humanity for centuries.
Yet, space is more than just a place of wonder and mystery; it’s also a place of opportunity. Thanks to recent advancements in technology, the space industry is booming today, and looks set for blockbuster growth in the years ahead.
To help investors capitalise on the opportunities associated with this exciting new frontier, eToro has developed the SpaceTech Smart Portfolio. With this portfolio, investors can gain access to the companies that are spearheading the space revolution.
A new era of commercial space exploration
When you think of space today, you probably think of wealthy individuals making trips to space in state-of-the-art spacecraft. And that’s understandable — since these types of events have made headlines in recent years.
For example, on 11th July, 2021, we saw billionaire Richard Branson and three other crew members go to space on board Virgin Galactic’s VSS Unity spacecraft. Branson’s flight was a major milestone for the space tourism industry as it was the first time that a commercial space tourism company had flown a passenger to space. “I was once a child with a dream looking up to the stars. Now I’m an adult in a spaceship looking down to our beautiful Earth,” Branson said in a video from space.
A little over a week later, on 20th July, 2021, we saw Amazon founder Jeff Bezos launch into suborbital space with three other people on board his company Blue Origin’s New Shepard rocket in another landmark moment for the space tourism industry. Bezos said that he had been dreaming of going to space since he was a child and had been inspired by Neil Armstrong’s trip to the moon.
Then, in September 2021, we saw Elon Musk’s company SpaceX send several people to space in a historic mission named Inspiration4. This mission — which was a success on all fronts — was designed to raise awareness and funds for St. Jude Children’s Research Hospital while also showing that space travel is a reality today. It’s worth noting that Musk — who is a strong advocate for space exploration and colonisation — wants to make space travel as affordable and accessible as possible so that more people can experience it.
Ultimately, we have seen some major developments in the space tourism industry over the last few years, with many people having the opportunity to take a trip to space. Clearly, we have come a long way since American businessman Dennis Tito became the first individual to pay for a trip to space a little over 20 years ago (he paid Russia $20 million for a trip to the International Space Station in 2001).
Looking ahead, this side of the space industry is likely to grow rapidly, as space travel is now far more “affordable” than it was in the past. If you have a lot of money and going to space is one of your goals, it’s achievable. Interest is certainly high — as of mid-2022, Virgin Galactic (which sells tickets to space for between $250,000 and $450,000) had approximately 800 future reservations. So, there’s a lot to be excited about here.
Space satellites are solving major global challenges
Yet, when it comes to space opportunities, commercial tourism flights are only a small part of the story. From an investment perspective, among the most important areas of the market are satellites. Right now, space satellites are helping to solve some of the world’s greatest challenges.
Take Internet access, for example. Today, nearly 40% of the world’s population doesn’t have access to the Internet. In some areas of the world, such as Africa, Internet penetration remains very low. Satellite broadband — which can provide coverage to large areas with a high bandwidth — can help fix this. One of the big advantages of satellite broadband is that it doesn’t require any ground-based infrastructure. It can, therefore, provide coverage to areas that are not served by terrestrial networks. So, it’s particularly well-suited to providing broadband to underserved areas.
Space satellites can also help provide the Internet to those who are in remote locations, such as those who are out at sea. In the past, those at sea often had to go without the Internet — due to the lack of network reception. Thanks to satellite broadband, however, the game has changed. It’s worth noting here that recently, shipping giant AP Moeller Maersk announced plans to install SpaceX’s Starlink satellite Internet service on its fleet of 330+ containerships. With Starlink, those on board the containerships can expect the same level of connectivity as they would have ashore, including access to movies, music, and video calls. Rollout is expected to be completed in Q1 2024.
All in all, the rollout of satellite broadband has huge implications. In the years ahead, remote working, video calls, online gaming, streaming, and more will be possible in even the most remote locations, thanks to satellite technology.
Another challenge that satellites are helping to meet is the transition to a low-carbon economy. With satellite imagery, it’s possible to track emissions from power plants and factories. This can help identify areas where emissions are high so that strategies can be developed to reduce them. Satellite imagery can also be combined with artificial intelligence to monitor energy consumption and to identify areas where energy efficiency can be improved. This information can be used to develop energy efficiency policies and programs.
In addition, satellite technology is playing a role in the shift to sustainable farming. Here, satellite imagery is being used to monitor crop health and to identify areas where water and fertiliser are being used inefficiently. This information can be used to support sustainable agricultural practices.
Out-of-this-world opportunities
Looking beyond the opportunities generated by tourism and satellites, space offers many other exciting possibilities.
For example, it could potentially be a game changer for the logistics industry. In the future, freight could be delivered by rocket, instead of by plane or truck, reducing transportation times significantly.
Space could also revolutionise the mining industry. One day, we may see mining companies sending equipment to asteroids to extract minerals.
Manufacturing is another industry that could be shaken up. Space manufacturing has a number of advantages over Earth-based manufacturing (reduced gravity, natural vacuum, no contamination, extreme temperatures, etc.), so it could be used to manufacture certain products that are difficult to manufacture on Earth, such as semiconductors, heavy machinery, and infrastructure.
Overall, the opportunities are quite literally, out of this world.
Governments are spending billions on space
While companies like Virgin Galactic and SpaceX have been grabbing a lot of the headlines, public sector interest in space has also taken off recently. Seeing the immense potential that space offers, governments have been investing heavily.
Naturally, the US has been leading the way in space investing. In 2022, it spent almost $62 billion on space — around 60% of global government investment. It’s worth pointing out here that SpaceX’s success has in part been due to the support of the US government. Through a combination of grants and contracts, the company has been able to secure the resources necessary to develop cutting-edge technology and take space exploration to the next level.
Another country that has been spending heavily on space is China. In 2022, it spent about $12 billion on space programs, directing capital towards satellite launches, applications, and imagery.
Of course, Japan — traditionally a leader in the technology industry — has also been very active in the space industry. In 2024, the Japanese government is expected to subsidise the Japan Aerospace Exploration Agency (JAXA) to the tune of about 10 billion yen (more than $66,753,000) to help space development.
Meanwhile, India has also been making moves on the space front. Earlier this year, it came to light that the country will be investing in space research missions alongside the US. It’s worth noting that over the last decade, India’s space budget has roughly doubled.
It’s not just the world’s biggest countries that are getting involved though. Smaller countries have been getting in on the action too. Today, 20 countries across four continents have civil space budgets of more than $100 million, while 70 countries have active space programs. From Latin American countries (Argentina, Bolivia, Costa Rica, Ecuador, Honduras, Mexico, and Paraguay formed the Latin American and Caribbean Space Agency in 2021) to Nordic countries (Norway is about to open the first launch base for satellites on the European continent), everyone is entering the space market.
A $1 trillion market by 2040?
As for the potential market size, it’s big. Both Morgan Stanley and Citi estimate that the global space industry could generate revenue of more than $1 trillion by 2040, up from around $350 billion in 2020. This means that there are likely to be many opportunities for investors.
Breaking things down, Morgan Stanley estimates that satellite broadband will represent 50% of the projected growth of the global space economy by 2040 (and as much as 70% in their most bullish scenario).
“We believe the largest opportunity comes from providing internet access to under- and unserved parts of the world, but there also is going to be increased demand for bandwidth from autonomous cars, the Internet of Things, artificial intelligence, virtual reality, and video,” wrote analyst Adam Jonas.
Invest in space stocks with eToro’s SpaceTech Smart Portfolio
To help investors gain portfolio exposure to this exciting industry, eToro has developed the SpaceTech Smart Portfolio.
This is a diversified investment portfolio that offers exposure to a range of different types of space stocks including:
- Space exploration companies that are focused on developing technologies to explore space and expand human presence beyond Earth. An example here is Virgin Galactic.
- Aerospace companies that are developing and manufacturing space-related technologies and hardware such as spacecraft and launch vehicles. Examples here include Lockheed Martin, Boeing, and Airbus.
- Satellite companies that are designing, building, and operating satellites for various applications such as communications, navigation, and remote sensing. An example here is SES, a European company that specialises in satellite communications.
Designed for long-term investors, the SpaceTech Smart Portfolio offers a straightforward, efficient way of investing in space.
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