A hot fire test of an Archimedes engine, which powers the company's Neutron rocket.
rocket laboratory
Last week saw a rally in several space-only stocks, with leaders rising as much as 20% or more, partly driven by what industry 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 underestimate the potential catalyst that I don't think many people have talked about before: the most important human being in the history of the space industry having the attention of the president-elect, who in his last term “found a space that important enough to create a separate branch of the military,” said Andrew Chanin, executive director of ProcureAM, which runs the UFO ETF focused on space, he told CNBC.
Just this week I saw rocket laboratory up to 41%, Intuitive machines up to 28%, global needle up to 26%, Planet Laboratories up to 16%, red wire up to 15% and AST Mobile Space up to 10%.
Those gains were catalyzed in part by third-quarter results and individual updates, such as Rocket Lab's progress in selling Neutron and Spire its maritime business to eliminate debt.
But there's broader market sentiment that's also driving these stocks, said Cantor Fitzgerald analyst Andres Sheppard, who has buy ratings on Rocket Lab, Redwire and Intuitive Machines.
“I think there's definitely an uptick in risk post-Trump victory that's being reflected in this industry,” Sheppard told CNBC.
Stepping back even further for a year-to-date perspective, this week's best-performing space stocks have emerged from a post-SPAC malaise to triple or even quadruple in 2024.
“The space has been one of the best performers in the market this year for a handful of these names,” Sheppard said.
“We are seeing a huge increase in investor inflows,” he continued. “We're getting calls and emails from institutional investors, who 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 return to the moon thanks to Elon. [Musk]The ambitious goals of reaching Mars.”
Sheppard emphasized that the fact that Musk's SpaceX company is privately held means investors are turning to other companies for exposure to the space sector. Similarly, ProcureAM's Chanin believes SpaceX's dominant position in rocket launches and satellite broadband actually helps companies with spacecraft seeking a trip to orbit.
“Everyone benefits from the lower cost of access to space,” Chanin said.
Notably, this week has also seen a bifurcation between exclusive space stocks. Newer companies that have gone public in recent years rose while older ones fell, such as ecostar and Viasatboth fell more than 10% this week.
Alex King, CEO of Cestrian Capital Research, said that gap represents a changing of the guard among generations of space companies.
“The need for any of those legacy businesses is decreasing… I think what we're seeing in the space is a slower evolution than what's happening in technology, where it happens very quickly, where low cost always wins in the end.” . “said the king.
“I think there's an element of the market that determines which of these companies are here to stay and which are not,” King added.
Despite the huge gains so far this year by major space players, Sheppard doesn't see the sector slowing down anytime soon.
“The overall sentiment has been very optimistic and continues to be so, despite the outperformance,” Sheppard said.
That lines up 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” keep the industry momentum going.
“When space wins, Rocket Lab wins,” Beck said.
