Following the decommissioning of the space shuttles, NASA began a policy of outsourcing certain launch operations that had previously been administered in-house. Officially labelled the Commercial Crew Development (CCD) program, NASA's policy shift has sparked a new space race in which public and private companies compete for dominance in launching cargo and eventually crew to space.
Emerging as leaders in the new space race are Space X, Blue Origin, the Boeing Company, Northrop Grumman, and the joint venture United Launch Alliance, although many other companies stand to benefit as well. Additionally, whereas NASA was bound by its mission and political wherewithal, private launch companies are able to leverage their unique capabilities and sell to the highest bidder.
For each of the industry frontrunners listed above, there are dozens of other companies providing specialized parts, labor, and know-how. Further still, cheaper launch costs stands to benefit a whole tier of satellite and wireless communications companies.
The following guide will walk through how an average investor can enter the burgeoning world of space investment.
Investing in the space industry carries significant risk of loss and is not recommended for any type of retirement or long-term savings that a person will depend on in the future. The Space Investing Flowchart gives examples of who might be in a position to invest in space.
In addition to the above, given that the space-faring capabilities of the United States arose from wartime competition for military might, almost all US companies involved in space travel have extensive operations in defense or weapons manufacturing. This presents certain ethical questions that an investor must consider.
Without being an accredited investor, there is currently no direct way to invest in private companies such as Space X or Blue Origin. The average investor is therefore generally limited to investments in public companies. Thankfully, there are many public companies in the space industry.
Next, a prospective space investor must choose whether to build their own space portfolio with basket of single stocks (harder), or to simply buy shares of an Exchange-Traded Fund ("ETF") that tracks the industry as a whole (easier).
To state the obvious, the greatest challenge in building your own portfolio is finding companies poised for growth. This is no doubt amplified when it comes to investing in the space industry, as it is extremely difficult for a space company to turn a profit given the complexity of work and the lack of viable markets. Tack on the fact that large swaths of aerospace revenue is from government spending and not any natural market, and you have (no pun intended) an astronomical task ahead of you.
If that has not dissuaded you, see below for links and tips on how to build your own custom space portfolio:
Step One: Select a Broker
Step Two: Research and Select your Companies
Step Three: Invest