As you’ve probably seen in the media, two of the world’s richest men are battling to be the first to man a civilian space flight.
On Sunday, Virgin Group boss Richard Branson will take off aboard the VSS Unity, his rocket-powered spaceplane.
The mission will launch from his Spaceport America complex in New Mexico. It will carry Branson, two pilots, and three other employees of his space exploration company, Virgin Galactic (SPCE), to just below the Kármán line.
That’s the boundary between Earth’s atmosphere and outer space. Traveling there will allow Branson and his fellow passengers to experience a few minutes of weightlessness and take in the views.
Then, on July 20 – just over a week later – Amazon (AMZN) founder Jeff Bezos will take flight aboard New Shepard. It’s a vertical-takeoff rocket his space exploration company, Blue Origin, built.
It’s a chance to get in on the ground floor of a new major profit opportunity.
As with cryptos, legal cannabis, and other bleeding-edge tech, the surest way to make life-changing gains is by investing in a megatrend early on… and holding for the long run.
And although it’s still in its infancy, commercial space travel is already bringing in big bucks.
Tickets to travel on Virgin Galactic space flights go for $250,000 each. Six hundred people have already signed up on a waiting list… committing a total of $80 million to secure their flights.
Meanwhile, one yet-to-be-named passenger traveling with Bezos aboard New Shepard is coughing up $28 million for the seat.
And Branson and Bezos aren’t the only two billionaires with their eyes on space travel. At his space exploration company, SpaceX, Tesla (TSLA) founder Elon Musk plans to take humans to Mars.
So today, we’ll shine the spotlight on the new race to space.
And we’ll tackle the question we always ask in these pages: What does it mean for us as investors?
Each week, thousands of people around the world sign up to one of the 19 paid investment advisories we publish here at Legacy Research.
It’s the publishing alliance behind Jeff Brown, Teeka Tiwari, Dave Forest, Nick Giambruno, Jason Bodner, Tom Dyson, Dan Denning, Bill Bonner, and Doug Casey.
The Daily Cut is the premium e-letter we created for all paid-up Legacy subscribers. I’m Chris Lowe, your editor. It’s my mission to bring you our experts’ best ideas on how to really move the needle on your wealth.
These ideas are why the partners at Legacy brought Silicon Valley insider and early-stage tech investor Jeff Brown on board in 2015.
They saw how the biggest profits over the next decade and beyond would go to investors in bleeding-edge tech. And they knew Jeff would be able to unlock those profits for our readers.
He hasn’t disappointed…
He’s been early on everything from genetic medicine, to self-driving cars and trucks, the 5G boom, cloud computing, artificial intelligence, and even cryptocurrencies.
This has allowed him to rack up gains of 309%… 332%… and 432% in his model portfolios.
He started life wanting to be an astronaut.
And he got a B.S. in aeronautical and astronautical engineering – otherwise known as rocket science – from Purdue University.
It’s the program 25 astronauts have attended before heading into space.
But following a football injury, Jeff changed course and began a career as a high-technology executive.
He still maintains a keen interest in space. And lately he’s been showing his readers why he believes we’re at the dawn of a new era of space travel. Jeff…
Ultimately, commercial space flight will be widely available. That’s an amazing prospect. One day soon, orbiting the Earth for a few days will be a common family vacation akin to going to Disney World during summer break.
The only problem for investors right now is there aren’t a lot of ways to invest in space travel.
Shares in Branson’s company began trading under the ticker symbol SPCE in October 2019.
This followed a merger with a special-purpose acquisition company, or SPAC, headed by high-profile Silicon Valley venture capitalist (VC) Chamath Palihapitiya.
Since then, shares have soared.
As you can see, after a volatile ride, SPCE is up 295% since it went public.
But right now, SPCE is the only pure play on space travel available through your regular broker.
That’s good news for Branson and Virgin Galactic. Public investors are piling into SPCE.
It’s now an $11 billion company. That’s roughly the same size as American Airlines (AAL), the world’s largest airline by number of passengers… and the second-largest airline by revenues.
But Branson’s company is a minnow compared with American Airlines.
In 2019, which was pre-pandemic, American Airlines made about $45 million in revenues. That compares with revenues of just $3.8 million for Virgin Galactic the same year.
Branson can use the cash he raises from equity investors to build out his space empire. He can also plow it into other Virgin Galactic projects, such as supersonic air travel.
But having only one public pure play isn’t great for us as investors…
SPCE is surging due to pent-up demand to invest in space travel. But as more public space-travel stocks become available, investors will likely start moving their money out of SPCE and into those.
And don’t forget, Virgin Galactic shareholders will get crushed if things go wrong on Sunday, when the VSS Unity climbs more than 50 miles into the air.
There’s already been one fatality – a Virgin Galactic test pilot – in 2014. If something now happens to one of the world’s richest men, the share price could plummet.
Patience is the name of the game.
There may be only one pure play right now. But that will change. Jeff…
A few years ago, private investment in early stage aerospace companies was pretty meager. SpaceX, largely due to Musk’s presence, was the one standout that could raise large funds for its ambitious plans.
Aerospace was largely something investors saw as “too hard” and “too expensive.” Many believed it took “too long” to get a return on investment.
Fast-forward to today, and VC money is flooding into this industry. In the last year, VCs invested $8.7 billion in private aerospace companies. That’s only going to go up given the successes we’re seeing in the field.
With momentum like this, we are in what will almost certainly be a decade-long trend of accelerated innovation and breakthroughs in space. And soon, some of the top companies powering this trend will become investment targets.
Jeff’s paid-up subscribers are going to have a lot of fun following the new space race in the years ahead.
We’ll be keeping a close eye on it, too, here at the Cut. If Jeff is right, space stocks could be some of the market’s best performers over the next decade.
Exchange-traded funds, or ETFs, are baskets of stocks, wrapped up in funds, that trade like individual stocks.
In terms of fees, they tend to be cheaper than mutual funds.
That makes them an easy way to pick up exposure to market trends. And one space ETF, the ARK Space Exploration & Innovation ETF (ARKX), is garnering a lot of attention.
Rising Wall Street star Cathie Wood actively manages it. She’s CEO and CIO (chief investment officer) at ARK Invest. And she managed three of the six top-performing major ETFs in 2020.
The problem is there are a lot of holdings in ARKX that don’t have much to do with space travel.
This ETF owns shares in Google (GOOG) because it’s a leader in artificial intelligence. It owns shares in chipmaker Nvidia (NVDA) because it makes parts for the space travel industry. And it owns shares in Amazon.com (AMZN) as a play on improved drone-delivery technology.
It even owns shares in streaming service Netflix (NFLX). That’s apparently because satellite broadband could unlock millions of potential new Netflix subscribers.
These are not necessarily bad companies. But their relationships with space travel are tangential at best.
So keep that in mind if you decide to buy shares in ARKX as a way to play this megatrend in the making.
Finally, with an eye on some entertaining mailbag responses we can publish, we’ll wrap up with a question for you: Which of the three billionaires would you most trust to fly you to space – Branson, Bezos, or Musk?
Send your answers to feedback@legacyresearch.com.
Regards,
Chris Lowe
July 7, 2021
Barcelona, Spain