A hot-fire test of an Archimedes engine that powers the company's Neutron rocket.
Rocket Lab
The past week saw a rally in several pure-play space stocks, with the frontrunners gaining as much as 20% or more, in part because sector analysts said it was a “Trump-Elon trade,” a reference on the relationship between President-elect Donald Trump and SpaceX boss Elon Musk.
“I don't think anyone can downplay the potential catalyst, which I don't think many people have talked about before: The most important person in the history of the space industry has the ear of the president-elect, who in his past term … found space important enough “to create a separate branch of the military,” said Andrew Chanin, CEO of ProcureAM, which is leading it UFO space-focused ETF, said CNBC.
Just saw this week Rocket Lab increased by 41%, Intuitive machines increased by 28%, Spire Global increased by 26%, Planet Labs increased by 16%, Rewire increased by 15% and AST SpaceMobile increased by 10%.
These gains were partially catalyzed by third-quarter results and individual updates such as Rocket Lab's progress on Neutron and Spire's sale of its shipping business to pay down debt.
But there's also broader market sentiment driving these stocks, said Andres Sheppard, an analyst at Cantor Fitzgerald who has buy ratings on Rocket Lab, Redwire and Intuitive Machines.
“I think there's definitely a risk-on recovery from Trump's victory that's reflected in this industry,” Sheppard told CNBC.
Going back even further to look at the current year, the best-performing space stocks this week have emerged from post-SPAC misery and have tripled or even quadrupled in 2024.
“For a handful of these names, Space has been one of the best outperformers in the market this year,” Sheppard said.
“We are seeing a sharp increase in investor inflows,” he continued. “We are receiving calls and emails from institutional investors who are finally realizing that this market is only going to continue to grow. It will only continue to multiply for reasons of national security and the Artemis program to conquer the USA.” Astronauts back on the moon, because of Elon [Musk]”'s ambitious goals to get to Mars.”
Read more CNBC space news
Sheppard emphasized that the fact that Musk's company SpaceX is privately held means investors are turning to other companies to get exposure to the space sector. ProcureAM's Chanin also believes SpaceX's dominance in rocket launches and satellite broadband actually helps companies whose spacecraft are looking for a ride into orbit.
“They all benefit from the lower cost of access to space,” Chanin said.
Notably, there was also a split between pure space stocks this week. Newer companies that have gone public in recent years have risen while older “legacy” companies have slipped, such as: EchoStar And Viasatboth are down more than 10% this week.
Alex King, CEO of Cestrian Capital Research, said the gap represents a changing of the guard between generations of space companies.
“The need for such legacy businesses is decreasing. … What you're seeing in space is, I think, a slower evolution of what's happening in technology, where it's happening really quickly, and in the end low cost always wins,” King said.
“I think there is an element of the market that is figuring out which of these companies will stick around and which won't,” King added.
Despite the huge gains from top space companies since the start of the year, Sheppard doesn't expect the sector to slow down any time soon.
“The overall sentiment was very bullish and remains bullish despite the outperformance,” Sheppard said.
That's in line with the views of Rocket Lab CEO Peter Beck, who said on the company's third-quarter earnings call this week that he expects the new Trump administration to accelerate the momentum of space through a “very strong focus on space.” industry will be maintained.
“If space wins, Rocket Lab wins,” Beck said.
Comments are closed.