Investing in space – finding profits at the final frontier

The future of Greenland has dominated the headlines in recent weeks, but increasingly, the real action, both commercially and militarily, is taking place in space, hundreds, even hundreds of thousands of miles above the Earth. “Over the decades that I’ve been working in the industry we’ve shifted from focusing on getting rockets and satellites into space, to trying to find ways to use them once they are there,” says Jeff Thornburg, CEO of Portal Space Systems. Companies in the space sector now find themselves in the midst of a gold rush, with everyone from defence agencies to some of the largest private firms in the world beating at their door. The sector is on track to surpass $1trillion in value by 2032, according to Susana Cruz Ramirez, a research analyst at Panmure Liberum.

What's behind the recent commercial space boom?

The main reason for the boom in the private space industry is that it is now easier to get into space due to the rise of private firms that make frequent flights using reusable technology and at lower cost, says Heather Pringle, former commander of the US Air Force Research Laboratory, and current CEO of Space Foundation. “No fewer than three major companies – SpaceX, Blue Origin and Rocket Lab – have established their own capabilities to launch, deliver payloads, have their launch vehicles re-enter Earth’s atmosphere, be recovered and be reused to launch again.”

The existence of reusable rockets in particular has been a “game changer” for the industry in terms of cost savings, says Pringle. “What the US space shuttle used to carry for $30,000 per pound in weight (or more) can now be put into low Earth orbit for $3,000 a pound (if not less).” The development of cheap, reusable rockets has also had a “dramatic impact” in terms of launch speed and frequency. In 2024, a rocket was launched somewhere in the world every 34 hours. That rate was up to every 27 hours in 2025. These trends show no signs of slowing down, says Pringle. Indeed, they will accelerate in the years ahead.

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Another factor in the plummeting costs of transportation is that satellites have been slimming down. “Just as Apple and Samsung have been able to create iPads, iPhones and other smart devices, companies have worked out how to make miniature satellites that are just as powerful as traditional satellites, but weigh much less,” says Paul Thomas, global space innovation and energy innovation lead at Accenture. All this has put the cost of launching a satellite into space within the reach of a far larger number of companies.

The rise of AI and machine learning is also providing a major boost to the sector, says Thomas. Both developments have made satellites increasingly autonomous, reducing the need for human intervention in their operation. The most advanced satellites are “able to filter out noise to detect anomalies, and automatically to adjust their behaviour”. The AI revolution has also led to a huge increase in the amount of data that firms, institutions and individuals require. All these trends are leading to “a rapid commercialisation of space”.

Defence in space

Although there has been a major shift from the government to the private sector when it comes to the provision of space services, the government still has an important role as a consumer, especially when it comes to defence. When Skyrora, a launch vehicle manufacturer and operator based in Scotland, started in 2017, “we were just focused on doing work for the civilian side of the industry”, says its director of government affairs, Alan Thompson. Over the past decade, however, it’s become increasingly clear that “the military has an increasing interest in deploying assets in space”.

But because the military and defence sector is coming to the party relatively late, it just doesn’t have the time or ability to catch up. It will, then, probably partner with specialist space companies, either by outsourcing or through joint ventures. Skyrora and a number of other firms like it will then “see an increasing defence angle to what we are doing over the next few years”, says Thompson. Demand won’t solely be coming from the US, either. Governments around the world, he says, are seeking to become less dependent on American firms and launch sites. Europe in particular will be looking to beef up its independent space capabilities, says Ramirez.

That geopolitical tensions could spread into space is a depressing prospect, but the drop in the cost of launches has also encouraged a greater range of governments to get involved in space with more commercial motives. There are “more and more space agencies emerging around the world”, says Dylan Taylor, CEO of Voyager Space Holdings. Even two decades ago there were probably only about 15-20 space agencies in the world; now there are around 75. At the same time, existing space agencies have seen their budgets increase.

That spending can be controversial when there are plenty of problems on Earth. And of those 75 space agencies, probably around half have never had their own astronaut, admits Taylor. Yet most of them “are keen to mint one”, as having your own person in space can be a good investment more broadly. The acclaim won for getting someone into space “can be an important motivating tool” in terms of encouraging youngsters to take up of the study of science, technology, engineering and maths in their home country, for example.

Why is the military interested in space?

One reason the military is becoming so interested in space is because so much commercial activity on Earth depends on what’s going on in space. A report by London Economics in 2023 estimated that losing the Global Navigation Satellite System (GNSS), which powers GPS and other navigational aides, for just seven days, would cost the UK economy alone £7.6billion.

Another key commercial application is in communications. It’s still not possible for ground-based systems to deliver completely comprehensive broadband services in remote places, as Nat Edington of Filtronic points out. However, a satellite-based system would be able to do so. Expect terrestrial networks to set up in space over time. In the short run, this will be in the form of a hybrid system, where the terrestrial networks will be operating alongside low-Earth orbit (LEO) space networks. But “as we come to the end of this decade, most broadband connectivity will end up” being delivered from space.

The explosion in the number of satellites in space, as well as the fact that Earth-space communication “has moved from the realm of governments to the mass market”, means that an “incredible amount” of data about what’s happening on Earth is now being created and used by companies, says Mark Boggett of Seraphim Space. This is set to transform agriculture – “you can now use data from space to identify the performance of crops and determine whether they are infected with pests, or need more nutrition”.

It’s not just farmers who will benefit from this. “This imaging and data revolution” will affect almost every industry you can think of, from oil and gas to logistics and real estate, says Boggett. Satellite View, for example, one of the companies Seraphim has invested in, “has one of the world’s most advanced infrared cameras, which enables it to look down from space and determine whether there are people in individual buildings, as well as the overall insulation level of the building and its contribution to global warming”.

Space is the final economic frontier

There is also increasing interest in moving at least some economic activity out into space itself. To date, the space industry has been driven forward in three waves, says Ramirez: “the institutional interest in the space race in the 1950s and 1960s, the development of broadcasting satellites in the 1970s and 1980s, and the creation of low-cost launches and transportation by Elon Musk” in the present day. The fourth wave will be to build an economy in space. The rapidly decreasing cost of transporting material in space will make it “increasingly viable to relocate some of the more polluting sectors upwards”, she says. Two activities Ramirez puts at the top of the list for relocation are the data centres that power the AI revolution and the mining industry

Moving data centres to space will be a relatively straightforward problem to solve. We already know how to get all the infrastructure up there, and the low temperatures will provide a free source of cooling, says Jon Lusczakoski, a partner at AE Industrial Partners. Asteroid mining, however, will be more tricky. “We’ve proved that we can reach asteroids, but bringing the material back to Earth at a commercially viable rate will be a bit more of a challenge.”

But even if asteroid mining isn’t going to happen immediately, there are certainly ongoing discussions about mining the moon. Indeed, one of AE Industrial’s portfolio companies, Firefly Aerospace, the first commercial company to successfully land on the moon, “has been approached by companies that want to move mining assets to the moon”, says Lusczakoski. “It’s got to be the right assets to make it economical, but people are definitely trying to make the numbers work.”

SpaceX launches onto the stock market

The space industry clearly has a promising future, but one massive near-term catalyst that could change things in the next few months is the rumoured initial public offering (IPO) of Elon Musk’s SpaceX sometime this year. Musk himself appeared publicly to confirm that this would happen, around six weeks ago, when he called the reports “accurate”. Like many in the industry, Nick Flitterman of Portland Advisers admits to having mixed feelings about the controversial entrepreneur. There is, in his view, as well as those of others, a “major concern” over “having lots of money and power concentrated in one person’s hands”.

However, even this could work in the industry’s favour. If governments and companies decide that they don’t want to become solely reliant on Starlink and SpaceX, that in itself will “create new opportunities”. Musk has in any case played a big role in “getting people talking” about the sector over the past two decades; the IPO could be a “major catalyst” for the industry, especially in terms of raising the profile of the entire sector. This could be a good thing, says Flitterman, “as the higher the profile of space, the more money will flow into it”.

Jeff Thornburg of Portal Space Systems agrees that a SpaceX IPO, which could see Musk’s company valued at more than $1trillion, could serve as a “major inflection point”. It could prove to be a much bigger version of the 1995 Netscape IPO, which in retrospect is widely seen as marking the start of the dotcom era. Apart from anything else, a SpaceX IPO will serve as validation for those early stage investors who have put money into the industry and “have been waiting for a major flotation for a long time to demonstrate that their investment was justified”.

It’s not just venture capitalists who will cheer a strong SpaceX IPO. Over the past few years, Musk’s company has produced a stream of alumni, including Thornburg, who worked at SpaceX, who went on to set up their own space companies. Combined with the huge amount of wealth generated from the IPO, this should help create “the next generation of tech companies, start-up founders and investors”. Thornburg thinks it’s an “exciting” time to be working, or investing, in the sector.

Track the space boom with an ETF

Probably the easiest way to invest in the space sector is through an exchange-traded fund (ETF), such as the VanEck Space Innovators UCITS ETF (LSE: JEDG). This tracks the MVIS Global Space Industry index, which focuses on the largest and most liquid listed companies in the sector. The ETF has 25 holdings, with launch services company Rocket Lab Corp and satellite imaging company Planet Labs being the two largest. Overall, the holdings have a trailing price/earnings (p/e) ratio of 25, and the fund has a total expense ratio, a measure of the total costs associated with managing and operating a fund, of 0.55% – that is reasonable for such a specialised ETF.

The acknowledged leader in the venture-capital sector is Seraphim VC. Seraphim has launched various funds, but the Seraphim Space Investment Trust (LSE: SSIT) is the easiest for ordinary investors to access. It has a huge portfolio of unlisted companies that provide a lot of innovative services. The largest of these is miniature satellite provider ICEYE, which may be floated very soon. Another interesting company in the fund’s holdings is D-Orbit, which provides a “space-taxi” service – that is, rockets that travel inside a larger SpaceX rocket and cover the last part of the journey. It is one of the leading companies pioneering the idea of having data centres in space. The trust’s price has shot up in recent weeks and now trades at a premium of around 24% to its net asset value.

Four promising listed companies for investing in space

One of the few listed companies in Seraphim’s portfolio is AST SpaceMobile (Nasdaq: AST). AST SpaceMobile competes with Starlink by providing mobile-phone services from its “cell towers in the sky”, which includes the largest satellite that has ever been launched into space and has the power of 30 land-based towers. The company hasn’t yet turned a profit, but it has already established relationships with major mobile network operators, such as Vodafone, Verizon and AT&T. These deals involve the operators using AST to fill in the gaps in their terrestrial network coverage and should allow them to expand into other markets without deploying physical assets.

Another company that is no longer part of Seraphim’s portfolio, but which Seraphim was an early investor in before it went public in 2025, is Voyager Technologies (NYSE: VOYG). Voyager is split between two divisions: a military division that helps run Golden Dome, the US missile defence shield; and the space solutions division, which is the largest commercial manager on the International Space Station, and currently involved in a joint venture to build the replacement to the International Space Station. Like AST, Voyager Technologies isn’t actually making any money at the moment, but it hopes to start making profits by 2027.

One London-listed company that is worth considering is Filtronic (Aim: FTC). It was originally spun out of the University of Leeds back in 1977 and it provides technology that amplifies signals, making it easier for people on the ground to communicate with satellites in space and vice versa. As a result, the company has been a big winner from the rapid increase in the number of satellites deployed in space. Already its revenue has tripled between 2021 and 2025, with earnings per share rising more than tenfold since 2022, which justifies the fact that the shares are valued at 52 times 2027 earnings.

One European satellite company that Ramirez likes is SES (Paris: SESG). Having merged with rival Intelsat last year, SES now has one of the largest communication satellite fleets in the world. Ramirez particularly likes the fact that SES is now focusing on acquiring custom from governments. Internet uptake from satellites is expected to “accelerate across government, maritime, and aviation segments, driven by national security priorities and the need for remote connectivity”. Most listed companies in the space industry are either losing money or trading at sky-high valuations, but SES trades at a relatively modest 20.5 times 2026 earnings.

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