Blue Origin’s New Shepard crew (L-R) Jeff Bezos, Wally Funk, Oliver Daemen, and Mark Bezos walk near the booster.
Joe Raedle/Getty Images
made history of a sort Tuesday morning by taking the first paying space tourist across the Karman line, into space. Now Wall Street is figuring out what the event means for space-related stocks. Their initial take: Tourism is great, but big space dollars lie elsewhere.
The Karman line is an arbitrary boundary set 100 kilometers, or about 62 miles, above the surface of the Earth. That’s where some humans say space starts.
The 10-plus minute flight, which included Bezos and three passengers, went off without a hitch. The reusable rocket landed. And the capsule, carrying the four passengers, touched down shortly after the rocket and after the crew experienced moments of weightlessness while looking down on a portion of the planet.
Bezos and crew opined on how the experience changed them during a post flight press conference. “Prepare for more ‘influential’ space tourists to offer their ‘overview effect’ perspectives,” wrote Morgan Stanley analyst Adam Jonas in a Wednesday report. The flights are free publicity for not only space tourism, but the entire commercial space industry.
That can be good news for space tourism company
(ticker: SPCE), and for companies doing other things in space such as launch services provider
Blue Origin also represents competition for Virgin Galactic, but Jonas doesn’t sound worried. He points out the entire space industry needs more innovation to drive down costs. As Bezos put it Tuesday: “We’re in the barnstormer phase,” likening this version of the commercial space business to a time when people would pay to ride a crop duster around a farmer’s field.
Bezos added at his press conference that Blue Origin was approaching $100 million in pre sales. Virgin Galactic has about $150 million in pre-booked revenue. Blue Origin is catching up, but they are both swimming in a large, and expanding pool.
Investors seem to be coming around to that view, too. Galactic stock is up 4.1% after dropping Tuesday. The
is up about 0.6% in midday trading Wednesday.
UBS leisure analyst
believes space tourism is gaining traction with high net worth people. His estimate for the total space tourism market has grown from $3 billion by 2030 to $4 billion. The first estimate was from 2019. The $4 billion projection is from his Tuesday research report.
Both space tourism players, it seems, can have a business. The big space money, however, is elsewhere. By 2030, Castle sees the entire commercial space industry generating about $900 billion in sales.
Those sales will come from earth imaging businesses, mobile communications companies, providers of space-based internet and all the businesses supporting those firms with launch services, logistics and satellite manufacturing.
That amount of money is a lot, but it’s important to remember there is a space industry today. Things get launched and satellites do things like deliver radio to cars. The commercial space industry now amounts to roughly $400 billion a year, according to UBS. Growing to $900 billion works out to average annual growth of about 10% a year between 2021 and 2030.
That growth will create a lot of opportunity for businesses–and investors.
Jonas covered Virgin Galactic stock and writes extensively on the space economy. Another Morgan analyst, Kristine Liwag, covers Galactic stock for the broker now. Liwag rates shares Hold and has a $25 price target, according to Bloomberg. Liwag and Jonas are still listed as supporting personnel on each other’s space-related reports.
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