Investing in the Modern (Space) Age

The universe may be infinite, but it seems that our neck of the woods is about to get a little more crowded. That’s because thousands of pieces of “space junk” already in Earth’s orbit may soon be joined by tons more.¹ Satellites, rocket stages, even weaponry are all scheduled to go up over the next few years, with testing and development currently under way.

Government organizations such as the National Aeronautics and Space Administration (NASA) and the United States Department of Defense (DoD), as well as a number of large public companies (with market capitalizations ranging from about $50 billion to $200 billion) and some small privately held companies, are all engaged in missions that include:

• Replacing the aging 24-satellite Global Positioning System (GPS).
• Launching a new space telescope and turning on a new “exoplanet”-hunting satellite.
• Establishing a constellation of “micro” satellites for a high-speed global Wi Fi system.
• Responding to reported advances in Russian and Chinese “hypersonic” rocketry.
• Flying astronauts to the Moon (rocket testing is already under way).
• Transporting the first humans to Mars (rocket and habitat testing is under way).

(More information, including references, is available throughout this article.)

For space geeks, this promising launch lineup can mean only one thing: Pure heaven! As for investors, “They might not be as enthusiastic, for various reasons,” says Joseph P. Quinlan, head of Market Strategy at U.S. Trust. “Some people may know very little about investing in space while others may view the potential opportunities as sparse or ill-defined. But we think all of this is about to change.”

Just as Earth’s first Space Age famously began in 1957, with the launch of the Soviet satellite Sputnik, “we’re now entering a second age of space exploration, and it stands to create more plentiful and diverse investment opportunities,” Quinlan says. (For more, see “How to Invest in Space Travel” below.) So buckle up, start the countdown, and read on to learn more about major missions on the launchpad.

SPACE RACE: THE SEQUEL

With a crossover in certain technology and resources between the space program and the United States military, it is no surprise that an important source of space-related funding could come from the Pentagon. “Much of U.S. military superiority has relied on our technological dominance in space, allowing us to see, hear and know more than our adversaries,” says Cameron L. Dawson, an analyst in U.S. Trust’s Macro Strategy group. Recently, however, China and Russia have made advances in areas like hypersonic-glide rocketry, and the U.S. DoD is concerned.^2,3

“The DoD has signaled that significant investments will be needed in order to prevent our space dominance from being eroded,” Dawson says. That sense of urgency is reflected in the department’s 2019 budget request, which includes:⁴

• About $9 billion for space programs, including almost $5 billion for satellites and $2.4 billion for rockets.
• An 8% increase in the Air Force space budget request compared with the previous year.
• An increase in Air Force planned spending (from $71 million to $643 million) for a new space-based missile warning system.
• A boost in spending for hypersonics from $109 million in 2018 to $257 million in 2019.

Hypersonics. How are these missiles different from U.S. weaponry currently in place? “America’s decades-old standard of nuclear-payload delivery, the intercontinental ballistic missile, or ICBM, was designed to fly briefly into space and then descend to its target on a fairly predictable parabolic trajectory,” says Dawson. “In stark contrast, once a hypersonic re-enters Earth’s atmosphere, it can fly at many times the speed of sound and use unpredictable flight patterns that may confuse or evade radar.”

Space-based radar. What the DoD seems to want, in addition to its own hypersonic fleet, “is the ability to detect the missiles earlier in their flight path, before they become unpredictable,” Dawson says. “While current ground-based radar often cannot see that far due to the curvature of the Earth, an array of space-based sensors would provide almost total coverage of the planet.”^{5, 6}

While there may be a dozen or so tracking satellites already in orbit, they are apparently showing their age. Not only that, “some are the size of a school bus and could provide easy targets for a foreign power seeking to damage U.S. capabilities,” Dawson says. A new array could consist of hundreds of “micro” satellites, “drawing on the kind of miniaturization technology that already put powerful smartphones in our pockets,” the analyst adds. “An adversary would have a far more difficult time disabling a widespread constellation.”

Dawson believes that investment opportunities may be found in “those public companies that are making investments in areas prioritized by the DoD — space being among the most important.”

PROJECTS (ALMOST) AD INFINITUM

NASA, its longtime contractors and a handful of private companies are working on an array of primarily nonmilitary space missions. Launches are scheduled for this year, or the near future, but no matter the timeline, the complexities of space flight can mean project delays, cancellations or other, more serious setbacks. Here’s a look at some of the plans NASA and others have in motion.

New satellites. After several delays, the Hubble Space Telescope’s successor, the James Webb Telescope, is now scheduled to launch in 2020.⁷ The Transiting Exoplanet Survey Satellite (TESS), recently placed in orbit, should soon begin searching for planets beyond our solar system.⁸ The first satellite in the next iteration of the Global Positioning System (aka GPS III), which is said to be far more accurate than today’s version, should launch later in 2018.⁹ (For more, see “GPS: The Time (and Place) of Your Life,” below.)

Missions past Earth. NASA is testing technology that could return humans to the Moon within a few years.¹⁰ The agency is also scheduled to send survey satellites and a new rover to Mars within a decade, and could put humans in orbit there by the early 2030s.¹¹ Similarly, at least one privately held company is forging ahead with tests of rocketry and habitats, to send humans to live on Mars.¹² (Note that a return ticket is not, and may never be, an option.) NASA’s Parker Solar Probe, which is about the size of a small car, is scheduled to blast off soon on a mission to skim the atmosphere of the sun.¹³

Space commuter craft. A longtime NASA contractor and a privately held space company are both testing rockets designed to transport U.S. astronauts to and from the International Space Station (ISS), beginning in 2020.¹⁴ Since shutting down the Space Shuttle program in 2011, the agency has been buying seats on Soyuz spacecraft, but its contract with the Russian space agency ends in 2019. A private U.S. company, however, has been delivering supplies to the ISS.

Space tourism. For several years, a number of private companies have been testing short distance, “human-rated” vehicles to carry tourists to and from the upper atmosphere and beyond.¹⁵ More recently, a private company announced that the first off-world hotel, modular in design and featuring “luxurious accommodations,” should open for business in 2022, with reservations available now.¹⁶

Global Wi-Fi. A private company, following up on its plans to provide fast Wi-Fi access globally, recently launched two of what should eventually be a constellation of more than 10,000 “micro” satellites.¹⁷

Asteroid mining. This may sound like science fiction, yet NASA did in fact launch a spacecraft in 2016 that is scheduled to visit an asteroid named Bennu later this year and return with a rock sample in 2023.¹⁹ Furthermore, a private company plans to launch a fleet of crewless spacecraft in 2020, with the goal of analyzing the composition of passing asteroids. The one with the most promising makeup of minerals — perhaps those that are rare on Earth — may be targeted for actual mining at a later date.²⁰

Cleanup crew. The volume of orbiting waste, including defunct satellites and spent rocket stages, seems likely to expand exponentially, and with it the threat of “collisional cascading” — known as the Kessler Syndrome — would intensify. In response, several companies have been testing methods to remove garbage from space or shift it to a less traveled “graveyard” orbit.²¹