The year is ramping up to be a historic one for IPOs. But as investors are riveted by 2019’s lineup of young start-ups exhibiting unicorn- and even decacorn-class valuations, they may be overlooking a sector of the economy about to take-off in the not too distant future. Over the next 20 years the global space economy could triple to as much as $1 trillion, presenting an opportunity for fledgling firms to flourish into the mega-IPOs of the future, according to a recent story in Business Insider.
“Many new private space ventures are likely to become profitable in the coming years, and we would be surprised to not see some of these new startups IPO given their capital intensity,” UBS analyst Carl Berrisford said. While not likely to go public in the immediate future, below are 10 companies whose development investors may want to watch closely as it may not be long before they do.
10 Private Firms That Could Become Space IPOs
- Blue Origin: space flight / launch provider;
- Deep Space Industries: asteroid miner;
- International Launch Services: space flight / launch provider;
- PlanetLabs: satellite operator;
- Planetary Resources: asteroid miner;
- RocketLab: space flight / launch provider;
- SpaceX: space flight / launch provider;
- Stratolaunch: space flight / launch provider;
- Xcor Aerospace: space flight / launch provider;
- Bigelow Aerospace: space accommodation.
Source: Business Insider
What It Means for Investors
The space race is still in its early stages with the current amount of spending on satellite internet, space tourism, asteroid mining, and space-based manufacturing amounting to about $340 billion. But Berrisford expects that amount to grow to $1 trillion by 2040 as both companies and governments direct more of their spending toward space-related investments. The Trump administration’s call for U.S. astronauts to return to the moon within five years is just one example of the increased spending that is likely to happen.
Berrisford expects companies like Blue Origin to be taking tourists to space within the next few years, which will be an important catalyst that will awaken consumers and investors to all sorts of new possibilities. Once those new possibilities are imagined, demand for new applications will surge, “not unlike the trajectory of the online economy over the last 20 years,” he said.
There are still real hurdles that will need to be overcome, however, before the space economy becomes widespread. One of the major ones is cost. But as space technology advances, it won’t be long before it becomes affordable to the average consumer. As far as launching a satellite into space is concerned, Berrisford expects the cost of performing such a launch to drop by 90% over the next decade, according to Business Insider.
While it may be a few years before some of these promising young start-ups become available to the average investor, there are ways to get started investing in the space economy right now. Maxar Technologies Inc. (MAXR), which owns satellite operator DigitalGlobe and satellite manufacturer MacDonald Dettwiler & Associates and is listed on the NYSE, is one option. But some well-diversified companies like Lockheed Martin Corp. (LMT) and Boeing Co. (BA) also have exposure to the space economy.