Investors, particularly those of us that focus on small-cap companies with large explosive growth potential, scour the globe for ideas. What if we could go beyond just the bounds of Earth however to find potential portfolio companies? Outer space just may be one of the untapped growth frontiers that presents a massive opportunity for investment.
Citigroup (NYSE: C) is the latest Wall Street bank to see long-term potential for the space industry. By 2040, the investment bank estimates the space industry could reach $1 trillion in annual revenue, as launch costs plummet 95% and could decline further.
Businesses are just beginning to explore the commercial possibilities that space may bring, and some of the areas currently available to investors include satellite imagery, manufacturing of spacecraft and satellites, space tourism, and even mobile broadband networks that originate in outer space.
In the satellite imagery subsector, some names to look at are Terran Orbital (NYSE: LLAP) and BlackSky Technology (NYSE: BKSY). Terran Orbital is a $752 million market cap company that operates in two segments, manufacturing satellites and launch systems, and Earth imaging. The imaging unit provides commercial and civil defense customers with space-based images and accompanying data and analytics. Recently Terran Orbital successfully deployed six satellites from the SpaceX Falcon 9 rocket. BlackSky is a smaller company with a $347 million market cap that is primarily focused on the defense sector. The company provides geospatial imaging and analytics for use in intelligence and mission systems. BlackSky Technology recently announced that it had won a ten-year contract with the National Reconnaissance Office of the United States government to provide its Electro Optical Commercial Layer image service.
Within the spacecraft and satellite manufacturing subsector, some names to know are Sidus Space (NASDAQ: SIDU), Astra Space (NASDAQ: ASTR), and Virgin Galactic (NYSE: SPCE). Many investors may be familiar with Virgin Galactic already, which is the brainchild of Sir Richard Branson of Virgin Group fame and is one of the pioneers of space tourism. The company’s long-term goal is to make human commercial space flight a reality. Sidus Space and Astra Space are small manufacturing firms, with market caps of $29 million and $678 million, respectively. Sidus builds and launches satellites, but also manufactures the precision parts and instruments that are necessary to build and launch satellite systems, all the way down to the specialty screws and wiring harnesses. Astra also designs and produces space products such as satellites, but it also makes propulsion systems that enable satellites to safely orbit Earth once they are launched. It sells mainly to satellite operating firms, governments, and defense contractors.
Finally, there is the realm of space-based internet broadband service, which is powered by a company called AST SpaceMobile (NASDAQ: ASTS). Through its network of satellites, the company provides mobile broadband service that people can use in even the most rural areas of Earth, including out at sea and above the Earth while in flight. The $1.5 billion market cap company has signed agreements with several mobile phone and internet providers around the world as it gets its network up and running.
Outer space already holds many commercial possibilities for enterprising firms, and though much is still unknown about the sector, it is a safe bet that we have barely begun to scratch the surface of all the avenues that can be viable for space investments. Looking beyond the stars may just be the next hyper-growth area investors can harness for out-of-this-world returns.
Disclosure: No position. Spotlight Growth has no relationships with any of the companies mentioned in this article and did not receive payment in any form for its creation. This is an opinion article and is not meant to be financial advise. We are not broker-dealers or investment professionals. Please conduct your own due diligence. For more information on our disclosures, please visit: https://spotlightgrowth.com/disclosures/