How do you become a space shareholder ?: Investors smell astronomical returns

How do you become a space shareholder?
Investors suspect astronomical returns

When Virgin Galactic founder Richard Branson launch rockets into space on Sunday and ex-Amazon boss Jeff Bezos only nine days later, new spheres will be opened up. Professionals like the star manager Cathy Wood have the topic of space tourism on the list. The Virgin Galactic share has already ignited on the stock exchange. But is investing in space also something for ordinary investors? “The stock market loves groundbreaking stories,” says market analyst Konstantin Oldenburger from online derivatives trader CMC Markets. On the one hand, a lot of imagination is priced in, but on the other hand, “business indicators make little sense when analyzing such companies”. Richard Branson and Jeff Bezos are engaged in a media-effective competition for the space tourism business. Apparently, stockbrokers find this exciting. The bets on Virgin Galactic are already running hot. At the beginning of May the paper was still trading at $ 15, now at over $ 50. What happened there?

After numerous mishaps and delays in flight tests, analysts and investors had already written off Virgin Galactic’s shares. But then came the turning point. A successful test flight and the commercial license to also carry passengers into space let the share itself take off like a rocket. Now the next flight is to take place on Sunday with a full crew and bring the founder and billionaire Sir Richard Branson himself into space.

With all the imagination: The whole thing is above all a huge media spectacle. Space tourism will always remain a niche business. Or is it a business field with a future?

If you look at the people involved and the staging of the first flights, it initially looks like a gigantic PR project by a few multi-billionaires. Therefore, the assumption of a pure media spectacle at this stage of development is entirely justified. However, one should not underestimate the power a great idea can have on people. The Wright brothers, who made their first powered flight in 1903, were also initially ridiculed and declared crazy. If the first test flights are successful and the current pioneers continue to work on their idea with vigor and the necessary change, a lot is certainly possible in the private space industry. Therefore, as an investor, one should also observe and follow the developments and especially the supplier companies in this area.

Is it then in any way significant that Branson launched into space before Bezos?

No, the ego of the two is certainly crucial and important here. The history books would then certainly mention both in the same breath, should the missions succeed. The most important thing is that all crew members return to their families in good health after the flights.

How seriously do professionals take the topic?

The topic is still actually a niche, rather to be viewed as exotic. But the investment company ARK of star manager Cathy Wood thinks a lot of this idea and wants to jump on this bandwagon already now. With the “Space Exploration ETF”, ARK brought the right instrument to the market. But that was also marketing par excellence and should secure further inflows of funds for the company. Of course, individual companies also have their fans and followers who hope to find the next Tesla or Amazon share in this niche industry.

Is everything priced in at Virgin Galactic or is there still room for improvement?

Virgin Galactic 49.20

The stock market loves breakthrough stories, and investors love companies with significant sales potential. However, with a market cap currently around $ 13 billion, a lot of imagination has already been priced into Virgin Galactic’s stock. Especially when you consider the company will only have about $ 3 million in revenue this year, which could rise to $ 53 million next year. And Virgin Galactic is still a long way from being profitable.

But business indicators make little sense when analyzing such companies. Perseverance and a love of risk are the key ingredients in such investments. If the story goes hand in hand with fundamental success and growing sales at some point, the last word should not have been spoken at Virgin Galactic. However, expect a lot of short-term and speculative money around the event that could make the stock volatile.

Jeff Bezos company Blue Origin is not publicly traded. The Amazon founder has enough money to finance his space company himself. Can you still expect Blue Orgin to go public soon? Perhaps if his mission is successful on July 20th?

That may sound tempting to him and to potential investors, but at this point it is unlikely that Blue Orgin will go public. As you have correctly stated, Bezos does not need a cash injection and the disadvantages that come with a stock market listing should currently still predominate. It is hard to imagine that Bezos would like to answer questions from other investors about his project that is close to his heart.

The third member of the league of space billionaires and visionaries who we haven’t mentioned yet is missing: Elon Musk. He too wants to go into space this year. His company SpaceX is also unlisted and is financed by him. Musk is not averse to the stock market. With Tesla he mixes up the world of the stock market quite a bit. When can you expect an IPO here?

Indeed, SpaceX could go public in the future. But this also needs to be carefully considered and only come about if the company sees a realistic chance of being in the black. Otherwise, the skepticism of investors in such a blockbuster IPO is likely to be too great, since at the end of the day the investors do not want to finance a billionaire’s hobby.

If investors want to become space shareholders and not buy Virgin Galactic, how should they go about that?

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Kostantin Oldenburger, market analyst at the online derivatives trader CMC Markets

Many companies will participate and earn money in the exploration and development of space. Whether for the worldwide supply of high-speed internet or for earth observation – numerous companies and institutions are currently working on setting up larger satellite constellations in space. Most of them are currently listed on the US stock exchange through so-called shell companies. How high the quality is and whether the candidates are already mature enough for the stock market, however, often remains in the fog of the IPO.

So is the US market setting the pace for a new industry again?

Europe and especially Germany don’t have to hide. With the rocket manufacturer OHB and the laser satellite company Mynaric, there are also two interesting “space pearls” that can be found on the Frankfurt stock exchange floor in the future. Ultimately, however, it is also important to either go with a broad fund or ETF product or you have to invest a lot of time in your own research on the riskier individual stocks.

Diana Dittmer spoke to Konstantin Oldenburger