This past week saw several pure-play space stocks rally, with leaders up as much as 20% or more, in part driven by what sector analysts said 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 potential catalyst that I don’t think many people were talking about before: the most important human in the history of the space industry having the ear of the president-elect, who in his past term found space important enough to create a separate branch of the military,” Andrew Chanin, CEO of ProcureAM, which runs the UFO space-focused ETF, told CNBC.
Just this week saw Rocket 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 results 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 market sentiment that is driving these stocks, too, said Cantor Fitzgerald analyst Andres Sheppard, who has buy ratings on Rocket Lab, Redwire and Intuitive Machines.
“I think there’s definitely a risk-on, post-Trump-win rally that’s being reflected in this industry,” Sheppard told CNBC.
Back out even further to take a year-to-date perspective, and this week’s top-performing space 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 market this year for a handful of these names,” Sheppard said.
“We’re seeing a big increase in investor inbounds,” he continued. “We’re getting calls and emails from institutional investors, which are finally starting to realize that this market is only 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 back 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 companies to get exposure to the space sector. Similarly, ProcureAM’s Chanin believes SpaceX’s dominant position in rocket launches and satellite broadband actually helps companies that have spacecraft looking for a ride to orbit.
“They all benefit from the lower cost of accessing space,” Chanin said.
Notably, this week has also seen a bifurcation between pure-play space stocks. Newer companies that have gone public over the past few years climbed while older “legacy” players slid, such as EchoStar and Viasat, both down more than 10% this week.
Alex King, CEO of Cestrian Capital Research, said that gap represents a changing of the guard between the generations of space companies.
“The need for any of those legacy businesses is declining. … What you’re seeing in space, I think, is a slower evolution of what happens in tech, where it happens really quickly, which is low cost always wins in the end,” King said.
“I think there’s an element of the market working out which of these companies are here to stay and which aren’t,” King added.
Despite the huge year-to-date gains by the top space performers, Sheppard does not see the sector slowing down any time soon.
“The overall sentiment has been very bullish and continues to be bullish, despite the outperformance,” Sheppard said.
That aligns with the views of Rocket Lab CEO Peter Beck, who said during the company’s third-quarter earnings call this week that he expects the incoming Trump administration’s “very strong focus on space” to keep up the industry’s momentum.
“When space wins, Rocket Lab wins,” Beck said.
