Our theme of Space Stocks continues to underperform, falling 17% year-to-date, compared to a decline of the S&P 500 which remains down by 6%. Now, enterprise-backed space programs actually saw much progress through the Covid-19 pandemic, with the likes of SpaceX, Virgin Galactic, and BlueOrigin launching multiple crews and high-profile individuals into space. However, space stocks haven’t fared as well, as investors have been reducing their exposure to futuristic stocks as they brace for higher rates and tighter monetary policy.
Although the volatility could continue in the near term, as investors have been prioritizing cyclical plays and companies with stronger cash flows, there is still a pretty good case for investing in space stocks for the long haul. There has been a gradual shift from government-driven space programs toward privately run programs, and this could bode well for the companies in our theme. Moreover, new markets are opening up, ranging from reusable rockets, satellite-based Internet, space tourism, and point-to-point transport around the earth and this could drive revenue growth for the theme in the long run.
Within our theme, Lockheed Martin (NYSE:LMT) has been the best performer, with its stock up 12% year-to-date in 2022, driven partly by the ongoing tensions between Ukraine and Russia, which have been driving defense stocks higher. On the other side, Virgin Galactic (NYSE:SPCE) has been the worst performer, with its stock down by almost 36% year-to-date.
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Below you’ll find our previous coverage of the Space Stocks theme where you can track our view over time.
[10/15/2021] Space Stocks To Watch As SpaceX And Blue Origin See New Milestones
Our theme of Space Stocks has underperformed this year, declining 7% year-to-date, compared to a return of almost 18% on the S&P 500. However, there have been a couple of notable developments in the space sector in recent weeks. Elon Musk backed SpaceX saw its valuation soar to over $100 billion last week as the company made an agreement to sell stock from company insiders. This would make SpaceX the world’s second most valuable private company after China’s Bytedance. Moreover, Jeff Bezos’ BlueOrigin successfully launched the second crewed mission of its New Shepard rocket on Wednesday. These high-profile developments could bode well for publicly listed stocks with exposure to the space theme. As we’ve noted before, the longer-term outlook for the theme also appears promising, given the shift from government-driven space programs toward enterprise-backed programs and the emergence of a host of space-related opportunities such as reusable rockets, space tourism, and satellite-based Internet.
While all the stocks in our theme have meaningfully underperformed the broader markets, Lockheed Martin (LMT) has been the best performer, with its stock up 2% year-to-date. On the other side, Maxar Technologies (MAXR) has been the worst performer, with its stock down by about 22% year-to-date.
[7/15/2021] Virgin Galactic, Aerojet Rocketdyne: How Are Space Stocks Doing?
Our theme of Space Stocks has underperformed this year, rising by just about 8% year-to-date, compared to a return of over 17% for the S&P 500. That said, things could look up for these stocks. July is turning out to be an eventful month for the space industry. Earlier this month, Virgin Galactic (NYSE: SPCE) successfully completed its first fully-crewed test flight, which carried its founder Richard Branson to space. Separately, privately held startup Blue Origin plans to fly its founder, e-commerce billionaire Jeff Bezos as part of its first crewed flight on its New Shepard rocket ship on July 20th. These high-profile trips are likely to create a lot of buzz for the space industry, turning the focus on publicly listed space stocks in the near term. The longer-term outlook for the sector also looks promising, given the shift from government-driven space programs toward enterprise-backed programs and the emergence of a host of space-related opportunities including reusable rockets, satellite-based Internet, and point-to-point transport. Virgin Galactic has been the strongest performer within our theme, rising by about 39% year-to-date. On the other side, Aerojet Rocketdyne (AJRD) was the worst performer, with its stock down by roughly 11% year-to-date.
View our Space Stocks theme for the complete list of companies and an overview of their financial performance.
Investor interest in the space exploration area has been rising after Elon Musk’s SpaceX’s successfully completed its first manned mission this year. There are a couple of broad trends driving the industry. Firstly, there is a gradual shift from government-driven space programs toward enterprise-backed programs. Moreover, new markets appear to be opening up, ranging from reusable rockets, satellite-based Internet, space travel, and point-to-point transport around the earth. Per Morgan Stanley, the global space industry is poised to expand significantly over the next two decades, growing from roughly $350 billion currently to over $1 trillion by 2040. 
Although SpaceX remains privately held, we’ve picked a theme of a few publicly listed space companies including Lockheed Martin (NYSE: LMT), Aerojet Rocketdyne (NYSE: AJRD), Iridium (NASDAQ: IRDM), and Virgin Galactic (NASDAQ:SPCE) as part of our theme Space Stocks To Watch. Parts of the analysis are summarized below.
Lockheed Martin ($108 billion market cap, +0% YTD), is a diversified aerospace company that also makes satellites and space craft for government and commercial customers. The company is developing the Orion spacecraft that is intended to be used in NASA’s human spaceflight programs that will venture into deep space and lunar orbit. The company also provides launch services under the United Launch Alliance partnership with Boeing.
Virgin Galactic ($4 billion, +55%) is an aerospace company focused on suborbital spaceflight for private individuals and researchers. While the company is currently in the test phases and doesn’t generate meaningful revenues just yet, things are likely to change in the next few quarters, as it likely begins commercial space flights carrying paying space tourists from 2021, charging each passenger roughly $250,000.
Aerojet Rocketdyne ($3.4 billion, -7%) is an American rocket and missile propulsion manufacturer. While the company derives more than half its revenues from missile defense systems, its space business is also poised to grow considering its contracts with Boeing’s SLS rocket, Northrop’s OmegA, and the United Launch Alliance’s Vulcan rocket.
Iridium Communications ($4 billion, +20%) operates a constellation of satellites that are used for worldwide voice and data communication from hand-held satellite phones and other devices. The company essentially provides communication services across the world, even in areas where there is no cellphone coverage. Iridium largely caters to governments and private sector companies including maritime and aviation solutions.
What if you’re looking for a more balanced portfolio instead? Here’s a high-quality portfolio that’s beaten the market consistently since the end of 2016.
|S&P 500 Return||0%||-5%||102%|
|Trefis MS Portfolio Return||0%||-9%||258%|
 Month-to-date and year-to-date as of 2/9/2022
 Cumulative total returns since the end of 2016