Recently, aerospace stocks are getting hot attention. The catalyst was that Arc Invest, which is a hot topic with the highest rate of return, decided to launch an active listed index fund (ETF) that invests in space exploration companies on the 14th.
ArcInvest’s space exploration ETF ticker, led by Kathy Wood, is ARKX. It will be listed on the New York Stock Exchange within 75 days of receipt of the application with the Securities and Exchange Commission (SEC), or by March 29th.
Although the incorporation has not been disclosed, looking at the investment company sectors listed on the Ark Invest homepage, it is a measure of which technology fields will be incorporated. The main investment fields are △reusable rocket △orbital vehicle (artificial satellite, launch vehicle) △low-orbit and quasi-orbital vehicle (electric aircraft, zero-gravity experience ship) △aircraft drone △3D printing △implementation technology (artificial intelligence, robot, energy storage).
Space exploration ETF ARKX / Juconomi capture scheduled for release by ArcInvest
The market is paying attention to the launch of the space exploration ETF this year. The clock of the world seemed to have stopped for a while due to the corona last year, but this year can be said to be the first year of the’Era of Making Money in Space’. Elon Musk’s SpaceX plans to launch Internet services using low-orbit satellites and a tourism service where Virgin Galletics experience quasi-orbital space.
As the news of the launch of ARKX was delivered, stock prices surged from companies acquired by aerospace startups (SPAC/SPAC) to innovative companies in the aerospace field and long-established defense industry companies. Don’t ask, the volatility of the stock price is expected to increase as there is also a speculative fever such as investment.
It will be necessary to check what technology trends are in the aerospace industry, including the capital market, and which companies are located. Let’s take a look at which of those candidates for the devastating space technology company to be chosen by Cash Wood?
Cashwood’s favorite company
There are three companies that have declared that they will launch a tourist spacecraft within this year. SpaceX was founded in 2002 based on $1.5 billion in the sale of PayPal by Elon Musk, Blue Origin, which was invested by Jeff Bezos by selling Amazon stock in 2000, and Virgin Galactic, founded in 2004 by Richard Branson, chairman of the British Virgin Group. .
As ArcInvest has been proactively investing in Tesla, SpaceX is by far the most dominant company in the ARKX ETF. However, it is difficult for SpaceX to be incorporated as a privately held company right away. In September of last year, Elon Musk announced on Twitter that SpaceX’s satellite Internet division, Starlink, will be publicized (IPO) within a few years. It is expected that Starlink will not be incorporated into ARKX immediately after listing.
SpaceX is planning to set off the Crew Dragon, which will travel for 10 days at the International Space Station (ISS) in the second quarter of this year and return. Elon Musk, who dreams of relocating to Mars, is also preparing for a deep space tour of the Big Falcon Starship with the goal of 2023.
SpaceX is scheduled to launch this year, the concept of a space tourism vehicle, Crew Dragon / Captured by Jukonomi TV
SpaceX has raised $5.4 billion in private equity so far. As of August last year, SpaceX’s corporate value was 44.3 billion dollars, a 2300-fold increase in 10 years.
SpaceX’s core business is launch revenue and satellite internet business.
Of the 23 rocket launches approved by the Federal Aviation Administration (FAA) last year, 12 were SpaceX rocket launches. Launch revenue is estimated at $2 billion in 2018, and so far, most of the revenue from NASA. If the demand for satellite rocket launch increases in the future, it is expected that full-scale monetization will be possible.
The satellite internet business called’Starlink’ is the core business unit of SpaceX. Unlike the existing satellite internet service that uses geostationary orbit (36,000 km), the plan is to implement a 1Gbps high-speed Internet throughout the earth using small satellites with low orbit (340~1100km).
Space orbit classification / Jukonomi TV capture
Blue Origin is also preparing a tour product to observe the earth after experiencing weightlessness for several minutes by riding the New Shepherd to an altitude of 100 km this year. Blue Origin, which aims to conquer the moon, is scheduled for the first test flight of New Glen, a rocket that carries cargo to geostationary orbit this year.
Blue Origin also announced the Kuiper project, a low-orbit satellite internet business, in April 2019. However, it will take a considerable amount of time to come true, as the technology for launching manned spacecraft or landing satellites in orbit has not yet been demonstrated.
First private space travel agency
Virgin Galactic is at the forefront of commercializing private space travel. We have already received a refundable deposit of $1000 for 700 prospective passengers, and we plan to launch the quasi-orbital vehicle VSS Unity in the first quarter of this year. Rather than in the form of a rocket, the aircraft reaches quasi-orbit through secondary propulsion and then returns to the ground through downhill flight.
Virgin Galactic’s semi-orbital vehicle for space tourism scheduled to depart this year VSS Unity / Jukonomi TV capture
Another core business of Virgin Galactic is the development of supersonic aircraft. The first design was unveiled in August of last year, and it is said that it is possible to break through from Seoul to Bangkok in an hour with Mach III.
Virgin Galactic was listed on the New York Exchange in a spec method in October 2019. Virgin Galactic’s stock price, which was $23, has surpassed $32, as the incorporation of ARKX is considered a leading stock.
Virgin Orbit, a small satellite rocket launcher that was spun off from Virgin Galactic in 2017, is also preparing for listing through the VGAC. Virgin Orbit successfully launched a satellite on the 18th. The advantage is that it is cheaper than the ground launch method because it launches the rocket after lifting the rocket by plane.
Reusable rocket field
ARKX’s first investment destination by ArcInvest is a reusable rocket company. Reusing rocket projectiles is key to keep costs down. Elon Musk also said that if the rocket projectiles can be reused like airplanes, the cost can be reduced to a hundredth.
No projectile is yet fully reusable. Only SpaceX succeeded in recovering the first-stage rocket. Blue Origin has even succeeded in rocket recycling technology.
In addition, Virgin Galactic, unlisted Rocket Labs, and ULA, a joint venture between Boeing and Lockheed Martin, are also developing single-stage reuse rockets.
SpaceX’s reusable rocket Falcon 9 succeeded in recovering the propellant in the first stage / Capture of Juconomi TV
Orbital and low-orbit vehicle fields
In the field of orbital vehicles and low-orbit/quasi-orbital vehicles, together with Virgin Galactic, Barracks Technology (MAXR) is regarded as a leading company.
Founded in 1969, Barracks Technology is a company specializing in earth observation services and satellite services running along orbit. We provide secure watch services such as geographic information data analysis to the government and private companies. Also, the company that manufactured the SXM-7 satellite of Sirius XM (SIR) launched in December of last year is Barksa Technology.
Spaceship startup Momentus is about to be listed through SRAC. SRAC stock prices also surged on the news of the ARKX launch. Momentus provides services to transport necessary goods to space stations or satellites.
Aerojet Rocket Dyne (AJRD), a rocket propulsion device manufacturer, is also a candidate for ARKX. Founded in 1942, it recently completed the next generation rocket engine AR1 with multi-stage combustion. Lockheed Martin (LMT) agreed to acquire Aerojet Rocketdine for $4.6 billion in December last year, and the final acquisition is expected to be completed in the second half of this year.
Aeronautical drones and 3D printing
As ArcInvest selected aerial drones as an investment destination for ARKX, the stock prices of drone companies led by Urban Aviation Mobility (UAM) also jumped.
Lee Hang Holdings (EH), which is listed on NASDAQ as a leading air drone company in China, is focusing on the autonomous driving drone taxi business. In November of last year, we demonstrated an autonomous drone taxi from Yeouido to Incheon Airport, and this drone was Lee Hang’s product.
Drone taxi of Yihang Holdings, China, which operated in Yeouido, Seoul last November / Hankyung DB
Binomial is still in the red, but sales growth is very steep. Sales are expected to grow rapidly from $17.49 million in 2019 to $32.32 million last year and $89.17 million this year.
The U.S. company Age Eagle Arial System (UAVS), which focuses on the unmanned agricultural drone business, also climbed the stock price.
In addition, Blade, which provides helicopter taxi services in the US and India, is about to be listed on the spec. The stock price of EXPC, which was merged with Blade, also surged on the news of the ARKX launch.
The 3D printing industry will also play an important role in the future space industry. Nano Dimension (NNDM) is a 3D printing company that ArcInvest is already investing in.
Other space technology companies
Satellite communications, artificial intelligence, and energy storage companies are also technical fields related to the space industry. Prior to ArcInvest, UFO ETFs investing in space development companies were launched in April 2019. As the stocks held by UFO ETFs were selected as candidates for incorporation of ARKX, the stock price also jumped.
Major candidates for ARKX incorporation include Viasat (VSAT), which provides high-altitude satellite Internet service through large satellites, Iridium Communication (IRDM), which provides mobile satellite communication services and operates orbital satellites, and low-orbit satellites. Orbcom (ORBC), which operates the ground infrastructure, Laurel Space & Communications (LORL), which manages the integrated network of communication satellites and ground facilities, and Trimble (TRMB), which provides location-based software solutions.
US space exploration ETF UFO’s top holdings / Jukonomi TV capture
AST Space Mobile, which plans to build a broadband mobile network through low-orbit space satellites, is also about to be listed in the specification. The stock price of SPAC (NPA), which was merged with AST Space, also surged on the news of the ARKX launch.
Other traditional defense players such as aerospace defense manufacturers Raytheon (RTX) and Honeywell (HON), Northrop Grman (NOC), which develops fighters and builds warships, and L3 Harris Technology (LHX), which provides tactical communications and defense systems. Also, the stock price jumped on the news of the release of ARKX.
Global entrepreneurs also rush to invest
In addition to Elon Musk, Jeff Bezos, and Richard Branson, global entrepreneurs are actively investing in the aerospace industry. There are various investment purposes such as ground observation data, satellite launch, space travel vehicle launch, and mineral resource exploration.
Microsoft founder Bill Gates, an American venture company that aims to provide high-speed Wi-Fi anywhere in the world via satellite communications, and Mark Zuckerberg, a Facebook founder, invested in SETI to search for extraterrestrial life. Google’s Larry Page and Eric Schmidt invested in Planetary Resources to explore mineral resources.
Israel’s SpaceIL, the first civilian attempt to land on the moon, Moon Express, a lunar exploration startup, Stratorunch, a giant rocket launcher, and OneWeb, Planet, and Taranis related to ground observation data were also chosen by global entrepreneurs.
Innovative companies in the aerospace industry invested by global entrepreneurs / Source: Dongchan Yeom, Analyst Jiyoung Lee, Ebest Securities
Full-scale investment in the domestic space industry
Companies are also making full-scale investments in the space industry in Korea.
Korea Aerospace, which has been focusing on the development of launch vehicles and mid-to-large satellites, signed a business agreement with KAIST for research and development and commercialization of small satellites on the 18th.
Hanwha Aerospace also produces self-propelled guns and armored vehicles as its main source of sales, but it is steadily fostering the rocket engine business. On the 13th, it became the largest shareholder of Setrec I and started the satellite business in earnest. Setrec-I was established in 1999 by our satellite development researchers, and is the only company in Korea to have the ability to provide a batch of surface observation satellite systems.
Hanwha Systems has acquired the low-orbit satellite antenna Phaser, and is expected to complete the development of a small military reconnaissance satellite by 2023. LIG Nex1, which makes satellite parts, started developing a transport drone based on hydrogen fuel cells.
Due to the small ball launched by ARKX, there is already a speculative fever such as don’t ask investment. There is also a risk of a sharp decline in stock prices as the specs of space technology startups that are not making profits continue to be listed.
However, the space age seems to have already come. In the past five years, the aerospace industry has moved away from the government initiative and has been taking the initiative as a private enterprise. We look forward to continuing innovation in the aerospace industry, which has also included capital markets.
Reporter Hurran [email protected]