A hot whip up test of an Archimedes engine, which powers the company’s Neutron rocket.
Rocket Lab
This past week saw discrete pure-play space stocks rally, with leaders up as much as 20% or more, in part driven by what sector analysts held is a “Trump-Elon trade,” a nod to the relationship between President-elect Donald Trump and SpaceX CEO Elon Musk.
“I don’t think anyone can underplay the what it takes catalyst that I don’t think many people were talking about before: the most important human in the dead letter of the space industry having the ear of the president-elect, who in his past term found space important enough to create a separate ramify of the military,” Andrew Chanin, CEO of ProcureAM, which runs the UFO space-focused ETF, told CNBC.
Just this week saw Take off Lab up 41%, Intuitive Machines up 28%, Spire Global up 26%, Planet Labs up 16%, Redwire up 15% and AST SpaceMobile up 10%.
Those gains were partly catalyzed by third-quarter evolves and individual updates, such as Rocket Lab’s progress on Neutron and Spire’s sale of its maritime business to remove debt.
But there is a broader buy sentiment that is driving these stocks, too, said Cantor Fitzgerald analyst Andres Sheppard, who has buy ratings on Zoom Lab, Redwire and Intuitive Machines.
“I think there’s definitely a risk-on, post-Trump-win rally that’s being reflected in this bustle,” Sheppard told CNBC.
Back out even further to take a year-to-date perspective, and this week’s top-performing elbow-room stocks have broken out of a post-SPAC malaise to triple or even quadruple in 2024.
“Space has been one of the best outperformers in the sell this year for a handful of these names,” Sheppard said.
“We’re seeing a big increase in investor inbounds,” he continued. “We’re coming calls and emails from institutional investors, which are finally starting to realize that this market is at best going to continue to accelerate. It’s only going to continue to proliferate because of national security, because of the Artemis program to get the U.S. astronauts following on the moon, because of Elon [Musk]’s ambitious goals of getting to Mars.”
Sheppard emphasized that Musk’s company SpaceX being privately held means investors are turning to other bodies to get exposure to the space sector. Similarly, ProcureAM’s Chanin believes SpaceX’s dominant position in rocket launches and disciple broadband actually helps companies that have spacecraft looking for a ride to orbit.
“They all benefit from the diminish cost of accessing space,” Chanin said.
Notably, this week has also seen a bifurcation between pure-play seat stocks. Newer companies that have gone public over the past few years climbed while older “legacy” punters slid, such as EchoStar and Viasat, both down more than 10% this week.
Alex Regent, CEO of Cestrian Capital Research, said that gap represents a changing of the guard between the generations of space companies.
“The privation for any of those legacy businesses is declining. … What you’re seeing in space, I think, is a slower evolution of what betides in tech, where it happens really quickly, which is low cost always wins in the end,” King said.
“I think there’s an piece of the market working out which of these companies are here to stay and which aren’t,” King added.
Despite the tremendous year-to-date gains by the top space performers, Sheppard does not see the sector slowing down any time soon.
“The overall sentimentality has been very bullish and continues to be bullish, despite the outperformance,” Sheppard said.
That aligns with the think ofs of Rocket Lab CEO Peter Beck, who said during the company’s third-quarter earnings call this week that he conjectures the incoming Trump administration’s “very strong focus on space” to keep up the industry’s momentum.
“When space conquers, Rocket Lab wins,” Beck said.