Some of the most popular market trends over the past few years have been artificial intelligence (AI) and cryptocurrency. Another must-buy of late has been space, with the sector expected to hit a value of $1.8 trillion by the year 2035.
Easing production and launching costs have been a welcome contributor to satellite growth. Automation has radicalized the supply chain, while growth has been spurred by smaller-sized 5G satellite popularity. Per a World Economic Forum report, the "number of satellites launched per year, for example, has grown at a rate of 50%, while launch costs have fallen 10-fold over the last 20 years." With this massive paradigm shift, there’s gold in the hills for investors.
SpaceX magnate and the suddenly influential Elon Musk has found himself sitting closer than ever to the White House. A tender offer earlier in the month valued SpaceX at $250 billion, and an initial public offering (IPO) in the next four years could upset space race hierarchy. But by the time SpaceX goes public, if ever, the sector will have jumped the shark. Now is the time to do the research, because the satellite sector is littered with intriguing names that have taken off in recent months.
There’s a difference between space flight and satellites. Richard Branson’s Virgin Galactic (SPCE) is a trailblazer with the former, but SPCE has shed over 40% in 2024 so far and with only a $214 million market cap. Where the money is flowing is to satellites and rockets, or Earth Observation (EO). Rocket Lab USA (RKLB) and Intuitive Machines (LUNR) have market caps at $13.50 and $2.20 billion, respectively, and boast massive gains in 2024.
Per the table above, RKLB and LUNR have relied on post-earnings pops to pad their gains this quarter. RKLB has been enjoying an upward climb since August, with support at its 20-day moving average. LUNR has support at the 40-day ascending trendline. Both stocks have become so far removed from technical support that a short-term pullback seems imminent, an expectation underscored by their respective 14-Day Relative Strength Indexes (RSI) deep in “overbought” territory. For whatever reason though, there’s a massive buildup of short interest around the satellite industry. Both RKLB and LUNR have 13.9% and 31% of their total available floats sold short, despite a round of covering in the most recent reporting period.
Per a McKinsey report, the global space economy is forecasted to reach $1.8 trillion by 2035. With the contrarian potential around such an outperforming sector, the second-most intriguing acronym out there for investors after artificial intelligence (AI) should be EO, which stands for Earth Observation.