Our theme of Space Stocks – which includes U.S.-based established aerospace players, upstart space companies, and satellite communications firms – has declined by about 12% year-to-date, faring better than the broader S&P 500 which remains down by over 16% over the same period and the Nasdaq-100, which has declined by about 24% this year. While futuristic stocks have been impacted by rising inflation, which has forced central banks to raise rates, space stocks have held up a bit better, given that the theme also includes defense contractors who are likely to benefit from the elevated geopolitical tensions and rising defense spending following Russia’s invasion of Ukraine.
Although the theme could remain volatile in the near term, 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. Enterprise-backed space programs saw much progress through the Covid-19 pandemic, with the likes of SpaceX, Virgin Galactic, and BlueOrigin launching multiple crews into space and this trend is likely to continue. New markets also appear to be opening up. Satellite communications, for instance, appear to be going mainstream, after Apple unveiled text-based satellite connectivity for emergency situations on its latest iPhone. While Apple has a deal with Globalstar for its connective requirements, other players such as Iridium, which operates as a low earth orbit satellite network could be beneficiaries as other competing handset manufacturers add connectivity. Similarly, in August T-Mobile US entered into a partnership with Elon Musk’s SpaceX to connect a majority of the smartphones on T-Mobile’s network to SpaceX satellites using the carrier’s vast holding of the mid-band wireless spectrum.
Within our theme, Lockheed Martin (NYSE:LMT) has been the best performer, with its stock up 19% year-to-date in 2022, driven partly by the ongoing tensions between Ukraine and Russia, which have been driving defense stocks higher. Similarly Iridium (NASDAQ:IRDM) has also fared quite well, with its stock gaining about 10% year-to-date. On the other side, Virgin Galactic (NYSE:SPCE) a small-cap, pure-play space tourism player, has been the worst performer, with its stock down by over 55% year-to-date.
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|S&P 500 Return||3%||-15%||82%|
|Trefis Multi-Strategy Portfolio||5%||-12%||250%|
 Month-to-date and year-to-date as of 9/10/2022
 Cumulative total returns since the end of 2016