The Rise of the Private Space Industry
There’s a reason the term “rocket scientist” is used to describe someone who is extremely mentally sharp. Rocketry and space travel are among the most difficult endeavors due to the unique engineering challenges, astronomical costs, and the uncertainty and risk associated with them.
To illustrate this difficulty, one must realize is that the United States first landed on the moon in the late 1960s, when Richard Nixon was still the President. The last time a human was on the moon was in 1972. For the period between the 1970s to the 2010s, space travel was limited to governments and to a select few longstanding aerospace giants like Boeing (BA) and Lockheed Marting (LMT), which receivedmassive contracts.
SpaceX Market Cap Soars to $100 Billion
However, after several failed launches, Tesla’s (TSLA) visionary CEO Elon Musk opened the door to private space travel when his SpaceX company was awarded a $1.6 billion contract from NASA to resupply the International Space Station (ISS). Today, SpaceX regularly sends satellites to space for its exploding Starlink business (which provides high-speed internet access to remote areas globally). SpaceX, founded in 2002, is valued at $200 billion today. Though it took years to achieve, SpaceX shows that taking on the challenge of space can pay off.
What you Need to Know About Space Stocks
Though SpaceX and other private space companies have opened the door to the market and shown what’s possible, the inherent risk around the space industry is still evident. In other words, space stocks are a high-risk, high-reward realm, and investors should understand they are speculative bets before diving in.
Though SpaceX has become very successful and rapidly growing, the company remains private. At the same time, several space stocks like Virgin Galactic (SPCE) are down more than 90% since going public, are hemorrhaging cash, and are clearly in trouble. That said, there are three speculative public space companies worth considering, including:
Intuitive Machines Stock: To the Moon
Intuitive Machines (LUNR) specializes in cutting-edge space technologies, with a focus on lunar exploration. They offer engineering services and innovative products tailored for space missions, such as landers, satellites, and propulsion systems.
Intuitive Machines Scores NASA Contracts
Late last month, LUNR shares rose 33% as volume rocketed nearly 2,000% after NASA awarded the company more than $100 million to deliver payloads to the Moon’s south pole.
Image Source: TradingView
Though the company has suffered failures (like all space companies), Intuitive Machines made the first moon landing since the 1972 Apollo mission earlier this year. Though speculative, LUNR’s moon success and NASA contract make it a best-in-breed space stock.
LUNR: The Bull Case
While LUNR will be unprofitable in 2024, the company turned a profit in 2023, and analysts tracked by Zacks are bullish. The stock enjoys a Zacks Rank #2 (Buy). Should the company continue to gain momentum, the stock has attributes that could send it into orbit. LUNR has the explosive combination of low supply (share float = about 35 million shares), and high short interest (about 10.5 million shares sold short).
Momentum Stock: AST SpaceMobile
Zacks Rank #3 (Hold) stock AST SpaceMobile (ASTS) is building a satellite network in space that aims to offer mobile connectivity directly to regular smartphones by launching a group of Low Earth Orbit (LEO) satellites into orbit. Like SpaceX’s Starlink satellite network, ASTS company plans to provide 4g and 5g internet access to remote and underprivileged areas through its technology.
ASTS/SpaceX Launch
This month, SpaceX will launch ASTS’s first five commercial satellites. Through this ecosystem the company will be able to cover approximately 70% of U.S. mobile users with ~100% geographical coverage.
ASTS Partners and Investors
Over the past few years, ASTS has received investments from global telecommunication giants like Rakuten, Samsung, American Tower (AMT), and Vodafone. Meanwhile, in May, ASTS inked partnership/strategic investor and customer deals with AT&T (T) and Verizon (VZ). Through these partnerships, ASTS will benefit from strategic guidance and investments and a built-in customer base.
ASTS has a Strong Cash Position
Though ASTS is a fairly new company, its balance sheet shows a robust ~$300 million in cash on hand.
Image Source: Zacks Investment Research
Though the stock is strong, ASTS shares are extended. Investors should consider shares on a further pullback to the $20-$23 level, which coincides with the rising 50-day moving average.
Rocket Lab Solves Reusability
The monumental technological shift that led to SpaceX’s success was reusability. An excellent example of why this is true is commercial air travel. If airplanes had to be trashed after each use, commercial flights would only be possible for anyone but the wealthiest civilians due to astronomical costs. Like SpaceX, Rocket Lab (RKLB) has solved reusability (albeit on a smaller scale). Through its electron rocket, a small reusable launch vehicle, RKLB has sent more than 50 satellites to orbit for customers such as the Department of Defense (DoD).
Rocket Lab Reports Record Revenue
RKLB shares ignited in mid-August after the company reported record revenue of $106 million, an impressive 71% year-over-year increase. Though RKLB has not turned an annual profit since going public, its revenue trajectory is bullish.
Image Source: Zacks Investment Research
Rocket Lab has a Massive Backlog
As long as RKLB can continue to sending payloads to orbit, its revenue should grow. As of Q2, RKLB enjoys a massive backlog of more than $1 billion
Conclusion
The future is now, and the space frontier is for the taking. Though space stocks are inherently risky, Intuitive Machines, AST SpaceMobile, and Rocket Labs have the potential to rocket higher.
5 Stocks Set to Double
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Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
Today, See These 5 Potential Home Runs >>The Boeing Company (BA) : Free Stock Analysis Report
Lockheed Martin Corporation (LMT) : Free Stock Analysis Report
American Tower Corporation (AMT) : Free Stock Analysis Report
AT&T Inc. (T) : Free Stock Analysis Report
Verizon Communications Inc. (VZ) : Free Stock Analysis Report
Tesla, Inc. (TSLA) : Free Stock Analysis Report
Virgin Galactic Holdings, Inc. (SPCE) : Free Stock Analysis Report
AST SpaceMobile, Inc. (ASTS) : Free Stock Analysis Report
Rocket Lab USA, Inc. (RKLB) : Free Stock Analysis Report
Intuitive Machines, Inc. (LUNR) : Free Stock Analysis Report
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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