To the moon and back: will space stocks rocket or burn up in 2022?

Setbacks including the failed launch of a Blue Origin rocket are draining optimism for space tourism’s much-fêted future, while Virgin Galactic’s share price had a catastrophic 2022. But a new report says the sector could be worth $7bn by 2027, and a new discovery suggests possibilities for space travel beyond tourism.

• Virgin Galactic stock plummeted by 74% in 2022.
• The space tourism market is tipped to reach $7bn by 2027, while ‘zero gravity’ trips could significantly widen space tourism remit.
• The Procure Space ETF holds Virgin Galactic and is down by over 25% in 2022.

Some positive signs have emerged from the embattled space tourism sector, with Elon Musk’s SpaceX announcing that it is raising a $750m financing round, at a valuation of $137bn. The space exploration firm has been tipped as one of 2023’s most hotly anticipated IPOs, according to Forbes.

In a further sign that the promise of space tourism may finally fulfil its promise, a 27 December report from Research and Markets showed that the global space tourism market could be worth $6.95bn by 2027.

In November, Virgin Galactic [SPCE] announced the two companies that will make parts for its Delta spaceship from 2023, Bell Textron and Qarbon Aerospace. Delta is scheduled to enter service in 2026, and could fly as often as once per week. If progress remains on track, this could boost the Virgin Galactic share price, which fell 74% across 2022. By the end of December, it was valued at just $3.48.

In July 2021, Jeff Bezos’ space tourism venture Blue Origin made its first journey into space, with a crew including Bezos and his brother Mark. And last year in April, SpaceX launched the world’s first tourist-only commercial trip to orbit, with three passengers and one astronaut. The private charter flight took three businessmen on a week-long trip into space for $55m each.

Space tourism losses still order of the day

Despite making headlines, space tourism is still in its “very early days”, Andrew Chanin, whose firm ProcureAM enables investors to gain exposure to the space industry via its Procure Space ETF [UFO], told Opto Sessions in 2021. In November, for example, Virgin Galactic announced losses of $146m for Q3 2022, widening by 204.2% from the $48m loss in the year-ago quarter.

More travellers taking off and returning safely from space will help the sector to make returns on investments, Chanin said.

Until recently, space tourism has been marketed to billionaires. However, businesses offering more modest space experiences closer to home could drive alternative ways to make money. Zero G, a private company founded in 1993, takes customers on Boeing 727s that fly in parabolic arcs, simulating the zero-gravity passengers would experience in space, with prices starting at $9,070.

Halo Space, a Madrid-based startup founded in 2021, uses balloons to float passenger capsules 40km above ground: 60km short of the Kármán line, the aeronautical boundary of Earth’s atmosphere, but high enough for spectacular views. Its first commercial flight is slated for 2025, with tickets priced between €100,000 and €200,000.

Funds in focus: Procure Space ETF

Existing space-themed funds focus on a number of space-related industries, including satellite technology, aerospace and defence systems.

The Procure Space ETF [UFO] focuses on space-related businesses that can provide “diversification beyond the limitations of solely earthbound companies”. The fund’s top holding at 10.31% of assets under management (AUM) is Maxar Technologies [MAXR], a company that specialises in communication, radar and satellite products and services. As of 3 January, the fund also holds Virgin Galactic at 3.63% AUM. Throughout 2022, the fund fell by 25.8%.

The ARK Space Exploration and Innovation ETF [ARKX] has its largest allocation in Trimble [TRMB] at 9.21% as of 3 January. TRMB makes Global Navigation Satellite System (GNSS) receivers that are used in space. The fund does not hold Virgin Galactic shares, and fell by 34.3% through 2022.

The fund with the largest amount of Virgin Galactic stock is SPDR S&P Aerospace & Defense ETF [XAR], which holds 2.93% of the portfolio as of 30 December. In 2022, the fund fell by 5%.