Does a new space race herald future investment opportunity?
With 2019 marking the 50th anniversary of the first moon landing, an ambitious new space race is taking shape. Here, Newton portfolio manager Paul Flood considers the lessons learned from previous space programmes, the changing shape of space exploration and possible investments of the future.
After centuries of speculation about possible life on Mars, could we one day see a human colony established on the red planet? According to Spacex and Tesla founder Elon Musk such an outcome may not just be desirable, it could be essential in the long-term. Indeed, Musk has said he believes such a human outpost may be mankind’s only hope in the event of a third world war1
While it would be easy to dismiss this as far-fetched, improvements in technology and a recent resurgence of interest in space travel have undoubtedly brought a new urgency and ambition to competing global space programmes.
The original space race was borne of the political and ideological battle between the US and former Soviet Union, with both competing to prove their supremacy and celestial reach. Now, just half a century later, the once ground-breaking technologies of the Sputnik and Apollo space programmes have given way to vastly more powerful rocket and satellite systems. According to NASA, some existing smartphones with 16 gigabytes of memory have about 240,000 times the memory of the US Voyager space probes2 launched in the late 1970s.
While once the likes of NASA and the Soviet Space programs fought for supremacy, today, it is mainly ambitious business leaders such as Musk, Amazon billionaire Jeff Bezos and the UK’s Sir Richard Branson who are driving a new space race – fueling dreams of intergalactic tourism, moonbases and the wider colonization of other planets.
However, there are also increasing signs of new government backing for space initiatives. In March the US Trump administration announced a new goal of putting Americans back on moon by 2024 with US Vice President Mike Pence declaring America is now back “in a space race.”3
Other nations are joining in. Russia has long maintained its interest in satellite development and space exploration and Japan, China and India are amongst other countries to commit heavily to their own space programs.
In March, Indian Prime Minister Narendra Modi lauded the country as a new “space power” after Indian scientists shot down one of their own satellites in a controlled test4. Elsewhere, an Israeli organization, SpaceIL, recently launched the first private lunar lander5 and even the tiny Grand Duchy of Luxembourg has now established its own space agency.
Commenting on moves towards a new space race, Newton portfolio manager Paul Flood says: “As technology improves, interest in space travel has once again increased. With this year marking the 50th anniversary of the first moon landing, a generation of dedicated entrepreneurs and other investors are driving a new space race and helping develop this field and developing markets like India and China are also now heavily involved with the sector.
“While this is a very long-term prospect, improvements in technology and innovation, the advent of reusable rockets and falling technology costs look set to drive progress in space travel and could drive further investment in areas such as space tourism or even, in the longer term, exploiting valuable mineral reserves on asteroids or other planets.”
Flood acknowledges any potential investment opportunities in space are a long-term proposition, but just as technologies such as microwave heating took time to gain acceptance before becoming mainstream appliances, he argues the technologies being developed for space travel and exploration today could also find wider, more popular applications and uses in the future, while their development should fuel healthy demand for semiconductors and other essential components.
Flood also points to the importance of developing new lightweight materials with the strength to combat heat and the wider rigours of space in an environment where the heavier a spaceship is, the more expensive its journey. NASA is just one organisation currently exploring the development of super light, super strong metals and nanotube technology6 in order to reduce the sheer weight of spacecraft and lower costs.
Falling launch costs are creating new opportunities for rocket-led space missions
LEO = Low Earth Orbit.
Beyond space missions, one more prosaic application of space travel could see rocket technology harnessed to speed long haul flights across the world via spacecraft. Elon Musk has said he believes new rocket technologies could, in future, allow spacecraft to send passengers anywhere on Earth in under 60 minutes, for the price of a conventional plane ticket7.
Commenting on recent advancements in space technology and further likely innovation, Flood says: “Investing in the companies developing rockets is highly speculative, but looking at the supply chain, any reduction in weight of these craft could lead to significant fuel savings.
“In terms of development, 3D printing techniques seem particularly well suited to developing new structures that reduce material and weight, while ensuring structural strength is retained. All of this could lead to potentially promising investment opportunities in this and other space-related areas in the future.”
Flood is more sceptical about the prospects for establishing human colonies on other planets, given the huge distances and natural barriers involved, though he recognises the very human concerns that can drive such ambitions. Either way, and with some analysts estimating the space industry could be worth US$805bn by 20308, he does acknowledge space travel itself should become easier and cheaper in future, given ongoing scientific advances.
Commenting on current predictions for space travel and interplanetary exploration, he says: “There are always some Malthusian arguments about why the Earth’s population is too big, concern there are too many people on the planet or that there is not enough food to go round.
“Human ingenuity, curiosity and imagination can drive innovation, and who knows what progress can be made on this front? It is not unreasonable to suppose some of the smart people and entrepreneurial innovation we are seeing in this area could lead to some huge leaps in technology development in the future.”
The final frontier: Potential investment opportunities of the future
1 The Guardian. Elon Musk: we must colonise Mars to preserve our species in a third world war. 11 March 2018.
2 NASA mission pages. 2019.
3 Reuters. Trump administration calls for putting Americans back on moon by 2024
4 Reuters. Modi hails India as military space power after anti-satellite missile test. 27 Match 2019
5 New Scientist. Space for everyone. 02 March 2019
6 Source: NASA website 2019
7 Elon Musk reveals his plan to send passengers anywhere on Earth in under 60 minutes… 29 September 2017.
8 IBS/CNBC.Super fast travel using outer space could be $20 billion market, disrupting airlines, UBS predicts. 18 March 2019.