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Investing in space tourism presumes, accurately, that there are no limits to travel lust. People with the money will pay to get a thrill … and bragging rights.
Depending on your neighborhood, the appeal of tourism may go well beyond travel around the world. It may include travel beyond the world.
A report by UBS suggests that space tourism could be a $4 billion market by 2030. Richard Branson and his Virgin Galactic are selling tickets to their sub-orbital flights for around $250,000. They are reported to have found buyers for 600. The Wall Street Journal reports that Elon Musk has bought at least one of them.
But Musk is not going to be content to be a mere customer of space tourism. In due course he will be another entrepreneur. Musk’s plan is to leap-frog past this sub-orbital stage. Space-X will start with orbital flight.
Meanwhile, Jeff Bezos’ Blue Origin is staying mum about its ticket prices.
The Magic of Reusability
But there is good reason to expect that the price of tickets won’t stay at or around a quarter million dollars for long. Most of the cost of a rocket is in the hardware, not the fuel. All three famous entrepreneurs just named are betting on reusable rocket technology. How reusable? How many flights per vessel? Those are big questions.
Blue Origin will be following its New Shepard rocket with an improved model, the New Glenn. The two models are, of course, named after the first and second U.S. astronauts in space, respectively. The New Glenn, we’re told, will be ready for a first launch in 2023, and will have a lifetime of 25 launches in it.
If that turns out to be accurate, it will be monumental. The great Saturn Vs of the Apollo era could send human beings to the moon. But they were a huge expense and each one worked for one trip only. That’s one big reason the moon flights came to an end and the great experiment tapered out. Twenty five uses?
Though this is all fascinating and will someday become investable for the short and medium range you should be cautious. Of course, all stock purchases involve risk.
A Safer Bet For Investing in Space
Lockheed Martin might be the best play for investing in space. This is an industry incumbent. Lockheed Martin was created by the merger of Lockheed Corp. with Martin Marietta in 1995.
The Martin Marietta part of this family tree built the Titan ICBMs of the Cold War era and later repurposed the design for spacecraft launch vehicles. Its Titans lifted all ten Gemini missions. Also part of the family tree of what is now Lockheed Martin was the old General Dynamics space business, creator of the Magellan probe (to Venus) and the Viking probes (to Mars).
As space tourism matures from infancy toward, at least, a kindergartner stage, one can expect Lockheed Martin (NYSE:LMT) to be there. In the meantime, it is everywhere else investing in space: in billion-dollar defense franchises, satellite launches, etc.
As the analysts for the Motley Fool say, the Pentagon is “increasingly focused on new missile technologies including hypersonics,” so that “by choosing a defense company like [LMT] you get exposure to all of the potential upside to space growth while also adding multiple billion-dollar defense franchises that support a 2.7% dividend yield. It’s the best of space, without all the risk.”
A Thought from Buzz Lightyear
If you insist on taking on the risks of a focused space-tourism play, the best in class may be Virgin Galactic (NYSE: SPCE).
SPCE gets credit from analysts for manufacturing most of its components in-house through a subsidiary, The Spaceship Company. This reduces the profit markups that an arms’ length manufacturer would require. It also avoids logistics snafus.
The stock was below $16 in mid May. Subsequent headlines got it up to $56., though it didn’t maintain that level. At this writing, it is in the neighborhood of $32.
Have a good flight!