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From space tourism to rocket launch technologies, these are the space stocks to look out for in 2024.
Justus Parmar, CEO of Fortuna Investments, a venture-capital and advisory company currently focused on space investments, sees Virgin Galactic Holdings Inc.
SPCE,
as particularly worthy of attention, pointing to the company’s market cap of $1.06 billion and its cash balance of $1.1 billion. “The reality is that the market is not valuing them at all,” he said. “This would be interesting to watch in terms of ‘does that change over the course of the year?’”
“If they are able to execute via cost cutting, successful launches, new iteration of rocket, they could surprise some folks,” Parmar added.
For Virgin Galactic, 2024 is about focusing on its new Delta Class spaceships, KeyBanc Capital Markets analyst Michael Leshock told MarketWatch. “It really could be a gamechanger for the company in terms of shifting from burning to generating cash,” he said.
Last month Virgin Galactic fleshed out its near-term growth strategy, laying out the roadmap for the new Delta Class. The spacecraft will begin flight tests in 2025 and enter service in 2026. Unlike the company’s current Unity spacecraft, which has four seats for paying passengers, the Delta spacecraft will have six seats, and will be capable of making up to eight spaceflights a month, significantly more than Unity’s one spaceflight a month.
Related: Amazon launches test satellites in Project Kuiper space-broadband push
This will increase Virgin Galactic’s monthly revenue per spacecraft from the current maximum of $2.4 million to $28.8 million, the company said.
But earlier this month Virgin Galactic’s stock fell after founder Sir Richard Branson ruled out further investment in the space-tourism company. This, however, should not be an issue for the company, according to Leshock. “In reality it doesn’t change much in terms of the capital that they need to complete their operations,” he told MarketWatch.
Nonetheless, he thinks that Virgin Galactic may undertake a capital raise to develop the Delta Class spaceships. “We wouldn’t be surprised if there was a $200 million to $500 million capital raise before 2026,” he said. “We don’t think that it’s necessary, but it is possible.”
Virgin Galactic’s stock has fallen 32.2% in 2023, compared with the S&P 500 index’s
SPX
gain of 22.4%.
Related: Virgin Galactic’s stock rises 10%, on pace for biggest daily percentage gain in three weeks
Away from space tourism, companies providing launch capabilities will also be in the spotlight in 2024. Elon Musk’s SpaceX, for example, has completed more than 90 launches in 2023. Earlier this week Amazon.com
AMZN,
founder Jeff Bezos’ Blue Origin also completed the 24th flight of its New Shepard launch vehicle.
KeyBanc’s Leshock sees a supply/demand imbalance in launch capabilities. “Everyone wants to launch satellite constellations at the moment,” he said. “With regard to launches, I think it’s going to be pretty supply constrained for the foreseeable future.”
Underlining the sheer scale of satellite launch demand, Amazon’s Project Kuiper aims to build a constellation of 3,236 satellites to increase global broadband access. Project Kuiper has secured 77 heavy-lift launches from Arianespace, Blue Origin, and United Launch Alliance, which is a joint venture between Boeing Co.
BA,
and Lockheed Martin Corp.
LMT,
Related: Rocket Lab is ‘one of the highest-quality space companies’ in the market, analyst says
In October the first two Kuiper satellites were sent into space atop a ULA Atlas V rocket, kicking off a months long series of tests. The FCC requires that 50% of the Project Kuiper constellation must be placed in orbit by July 30, 2026.
Attorney Ellis Brazeal, co-leader of Jones Walker’s aerospace and aviation team, also expects an uptick in space activity. “I think there will be more launches, more competition, the tempo of launches will pick up,” he told MarketWatch, pointing to SpaceX’s plan for 12 launches a month in 2024.
“We’re embarking on a low earth orbit satellite space race at the moment,” said Andrew Chanin, CEO of Procure AM, issuer of the Procure Space ETF
UFO.
Advancements in launch technologies will be a key theme in 2024 and beyond, Chanin added. “Whether its new propulsion technologies, more efficient fuels, new rocket designs – these are things that companies are working on today,” he told MarketWatch.
Set against this backdrop, Rocket Lab USA Inc.
RKLB,
is well positioned to benefit from growing demand for its launch capabilities, according to Parmar of Fortuna Investments. “A lot of folks are happy and comfortable using SpaceX … but some folks would rather not use SpaceX, and Rocket Lab has emerged as a bona fide launch provider,” he said. “They have developed a strong cadence for their launches.”
Rocket Lab also acquired bankrupt satellite-launch company Virgin Orbit Holdings Inc.’s 144,000-square-foot aerospace production and manufacturing facility in Long Beach, Calif. earlier this year and is working to meet key milestones for its new Neutron rocket in 2024. These include an engine test and Neutron’s first simulated flight orbit with hardware connected to flight computers.
Related: For Virgin Galactic, faster revenue generation is coming — ‘just not anytime soon,’ says one analyst
The 141-foot-high Neutron rocket is designed for the deployment of “mega constellations” of satellites, deep-space missions and human spaceflight, according to Rocket Lab. The company’s stock has risen 17% in 2023. Not all space stocks have fared as well in 2023 – shares of Momentus Inc.
MNTS,
which provides satellite transportation and servicing, have fallen 95.7%.
But the space industry front runner remains Elon Musk’s SpaceX, according to Parmar. “They have had a banner year, it will be interesting to see if they can keep that momentum into the coming year.”
IPO spinoff talk has recently spun around Starlink, the SpaceX-owned satellite internet constellation. But Parmar thinks this is unlikely to happen. “I personally do not think that [Musk] will spin that business out,” he told MarketWatch. “If you look at this track record as a CEO and entrepreneur, he’s not in the business of spinning things out.”
“I think he will IPO the company in the next three or four years, maybe longer, but it will not be a divided company,” Parmar added.
Related: United Launch Alliance eyes first Vulcan rocket launch later this year
ULA will also be busy in 2024, according to Jones Walker attorney Brazeal, pointing to the first launch of the company’s Vulcan rocket, which is scheduled for January. ULA is also planning to make the first crewed launch of Boeing’s Starliner spacecraft next year, as well as launches to support the Kuiper constellation.
As the space industry gears up for a busy 12 months, experts also see plenty of positives coming out of Washington. “The steadfast commitment of the Department of Defence (DoD) to ‘buy what we can build and build what we must’ we expect to exert a profound influence in 2024,” said Mark Boggett, CEO of the Seraphim Space Investment Trust
SSIT,
“We anticipate a surge in contract awards reflecting the strategic imperative to harness cutting-edge technologies and innovations from agile and pioneering NewSpace companies with the DoD playing a pivotal.”
Jones Walker government relations attorney Brett Richards also highlighted the 2024 National Defense Authorization Act, which establishes a legislative liaison of the Space Force to Congress. “This is small gesture, but one that shows a formal relationship is building with Congress and the Space Force,” he told MarketWatch. “Certainly, improving the communication, and all rowing in the same space direction – I think that’s going to be a huge thing for next year, and for space policy moving forward.”
But even amidst all this space industry growth, Brazeal expects to see more bankruptcies in the sector. “Two space companies, Masten and Virgin Orbit, have filed bankruptcy within the last two years,” he said, adding that it’s highly likely that we’ll see more. “Over the past few years, investment banks and VC firms were pumping money into space startups. Many of these will not survive.”
