In contrast to the traditional model of large government-run programs, NewSpace is a global industry of private companies and entrepreneurs who primarily target commercial customers, are backed by risk capital seeking a return and profit from innovative products or services developed in or for space. As a result, from large publicly traded companies to nimble start-ups, there have never been more (or better) opportunities to invest in the future of space.
From 2011 to today, we have watched a universe of 100 companies targeting commercial space opportunities increase to 700 companies worldwide. Roughly 70 percent of these companies are privately held, limiting the opportunities for investors. But the other 30 percent are publicly traded companies.
A $250 billion package delivery
Let's break down some of the more established niches within the investable universe of space-related companies and become familiar with a few key terms: packages, trucks and primes.
For the most part, the publicly traded companies seeking to profit from commercial space opportunities are focused on the manufacturing, operating and management of satellites (otherwise known as the packages). These companies currently generate $250 billion in annual revenue, making them by far the largest opportunity in the industry. Some companies in this vertical include DISH Network, DigitalGlobe, Garmin, Iridium and SES. They provide satellite services, either through broadcasting, imaging, navigation or communications, and the number of companies providing these services is growing.
Take DirecTV—which is set to be acquired by AT&T for nearly $50 billion this year. If you don't think of it as a "space" investment, remember that it would not exist without its fleet of satellites and the rockets that send them to space.
Another is the Stanford University-born satellite start-up Skybox Imaging. It was recently acquired by Google for $500 million.
Busting the monopsonies
The "trucks" that take the "packages" to space have been large government contractors, such as Boeing and Lockheed Martin. The "primes" generally focus on government contracts—e.g. military and NASA—as key customers for their rockets and satellites.
A shift has occurred in the past few years as companies like Orbital ATK (Orbital Sciences and Alliant Techsystems plan to merge), Aerojet Rocketdyne (owned by GenCorp), Harris and Airbus gradually move away from that traditional model of government monopsonies—one buyer and many sellers—to focus on more scalable, diverse commercial customers. This shift has not only allowed newer, smaller and more agile players to obtain funding from some large investors but also presents more market opportunities for both new and existing players.
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