Space Stocks

Space stocks: The future of SpaceX and in which space stocks you can invest now!

SpaceX – many will not have had this term on the “radar screen” for a long time. The company of Tesla boss and PayPal founder Elon Musk shot US-Americans from the ground into space again at the end of May 2020 – after almost ten years. Within a few years, the company managed to slip past the space companies that had been important up to that point from nowhere. What will happen to Space shares? Because even though SpaceX has attracted all eyes with its spectacular launch – there is no such thing as a share.

Space stocks: A difficult stock market?

At first glance, Space shares look like an investment in the future. In the end, are Space stocks a rather difficult market for investors? Space stocks are a market that requires a certain amount of know-how, as the private company that was involved in this sector did not play a major role for a long time.

Until the fall of the Iron Curtain, the focus was on NASA (US space agency) and its Soviet counterpart. In the meantime, space travel is very strongly influenced by private companies. This applies to the USA as well as to Europe and Russia.

Nevertheless, the aerospace authorities still remain very closely linked to space-oriented companies. Besides NASA, this also applies to the European ESA. Whereby: The term space stock actually allows for a very broad investment portfolio. It can change:

  • Space travel
  • Satellite development and construction
  • Component production
  • monitoring equipment
  • hardware and software
  • Spacefood
  • Telescope Technology
  • Space Tourism act.

In each of these areas, there are now various companies listed on the stock exchange.

Two companies that are very well known from the European area are companies that are involved in the original space travel as well as satellite development and construction:

  • AIRBUS (European Aeronautic Defence and Space)
  • BAE Systems.


Attention: At first glance, space exploration and the development of new space technology is a rather innocuous field. In practice, you as an investor may have to look very closely here. If you are guided in your decisions by ethical aspects, some of the Space stocks will fall out of the portfolio very quickly. Both BAE Systems and Airbus are not pure space companies. Both also earn money with armaments – which simply has no place in an ethical investment.

Which sector should you as an investor choose when it comes to Space shares? This is not an easy question to answer, as it does not in any way reflect your personal investment strategy.

Space shares: These companies are already listed on the stock exchange

BAE Systems and AIRBUS are two examples of companies that already play a role in the stock market – and are part of the European space scene. However, they are overshadowed by NASA or ESA and the dazzling private companies that keep reaching for the stars.

One reason why both of them tend to stay out of the glittering spotlight is surely to be seen in their entanglement in arms deals. Both cover not only space travel, but also the aviation sector. Here, billions in sales are made not only by commercial aircraft. Armaments now play a very important role for both companies.

Nevertheless, it is time to focus on space stocks in the search for an exciting investment field. One reason: Over the past 30 years, developments in this area have stagnated. A trend that is now reversing itself. Political, technological and military strength have dominated space travel since its beginnings. After the collapse of the Soviet Union, the race for space seemed to be won by the USA.

In addition, the space shuttle, for example, proved to be fragile over the years – and claimed several lives. With the discontinuation of the manned space program in the USA, the subject seemed to become history. So far, the ISS is the only human outpost in space. SpaceX around Elon Musk shows that private companies are now taking a pioneering role. And are not limited to just sending new satellites into space. With SpaceX, companies are reaching for the stars – also with regard to manned space flight. Space tourism will play a major role in the coming years.

WHICH SPACE STOCKS ARE TRADING – AN OVERVIEW OF IMPORTANT VALUES

In the aerospace sector, there is now considerable potential for high-yield investments. Although SpaceX is still missing, with AIRBUS or the space offshoot of Virgin there are some interesting securities. Which stocks are special “treats”? We not only show you the obvious stock trends in space stocks. As a trader, you will learn from us why it is worthwhile to think “around the corner” on this topic.

SPACEX: WHEN IS THE SHARE COMING?

So far, Elon Musk’s space company has not (yet) gone public. A move that is certainly astounding on the one hand, but on the other hand it could put millions in the company’s coffers. But there are also downsides to venturing to the stock market as a space pioneer. SpaceX has experienced these with the postponement of the first manned space flight.

Things do not always go smoothly. Of course, things get particularly tricky when it is no longer just a matter of transporting cargo to the ISS or transporting and launching satellites. Mistakes that lead to aborted launches or even the loss of a launch vehicle can take the course. Whether it makes sense for a space pioneer to expose himself to this risk – and to shoulder the pressure from shareholders – is questionable in view of these hurdles. Elon Musk and his team will keep this primary space business out of the stock market for the time being.

At least, statements from the management point in the right direction. The situation could be completely different with the second main pillar, which the entrepreneur wants to expand and scale in the future – a satellite-based Internet for everyone. Better known as Starlink, the management team around Elon Musk sees great potential in this area. And at least in their minds they seem to be already thinking about making Starlink a listed company.

AIRBUS: A EUROPEAN COMMUNITY PROJECT

AIRBUS is one of the best known aircraft manufacturers and a European joint project. However, the company is not exclusively active in the civil and military aviation sector. A subdivision of the company deals with the space sector. Until 2013, the group appeared as EADS, the result of a merger between the German DASA, Aérospatiale-Matra from France and CASA (Spain). AIRBUS Defence and Space is concerned with the topic of space travel.

This subdivision of the group includes

  • Satellite Technology
  • Orbital Systems
  • launchers.

The latter business unit is primarily involved in the development of launchers such as Ariane 6, for which the ArianeGroup is the operational arm of AIRBUS SE, which is a joint venture of AIRBUS and Safran.

Thales Group: Space technology from France

Thales is a company founded in 2000, whose business areas are divided into:

  • Armaments
  • Aviation
  • Space travel.

lie. The company’s roots lie in the merger of the defence divisions of Alcatel, Dassault Électronique and Thomson CSF. Acquisitions led to the creation of the Thales Group, which exists today and plays a role primarily in the development and production of space components and satellite technology.

The company’s product catalog includes traveling wave tubes and HEMP propulsion systems. Thales developed the latter for the German Aerospace Center. The share currently operates in a difficult environment. In the 5-year period it has achieved a price increase of around 10 percent, but is still far from its all-time high of more than 120 euros in mid-2018.

SIEMENS: SOLUTIONS FOR THE SPACE INDUSTRY

Siemens is one of the largest German conglomerates and is now focusing not only on its former core areas. Meanwhile, the group also covers business areas in the space segment – within the PLM group division. Space travel only accounts for a small part of the company’s activities. Siemens also works here for the aviation and defense industries.

Core aspects of the company’s activities include software development, data management and supply chain control. In the aviation sector, the company is also involved in the development and manufacture of drive technology.

Siemens is an example of how complex the integration of large corporations in the tech segment into the aerospace industry has become. The development of subsystems in particular is now a project on which many companies are working together. Among other things, there are interfaces between Siemens and the Thales Group in this context.

How Space shares trade: Also possible without direct ownership

As an investor you can profit from the new spirit of optimism in Space shares – by investing directly in Space shares. However, you will encounter a number of problems. In the end, dealing with the individual stocks is time-consuming and demands a great deal of your time. At the same time, you will not be able to avoid having to take a lot of money in your hands. Half a share of AIRBUS or BAE Systems is not readily available on the stock exchange.

As soon as private investors also want to adequately appreciate the topic of risk diversification, the entry into Space shares quickly turns into a balancing act. Is there another way to invest in space travel? If you don’t want to be constantly involved in investments, funds are an option. Various forms are available here. On the one hand, you can put money into actively managed investment funds. However, investors cannot necessarily always expect a better performance. Studies show again and again that the development of funds depends on the fund manager.

SPACE SHARES WITH ETFS TRADES

In recent years, ETFs have gained significantly in importance. These are passively managed funds that largely track indices – such as the DAX. The advantage is that the costs of ETFs are generally much lower than those of actively managed funds. A second advantage: ETFs reduce the effect of underperformers.

With ETFs you can also set up savings plans. In this way, you invest smaller amounts every month – and can thus build up capital over the long term. This is where the average cost effect becomes apparent very quickly. In other words, if the prices of Space shares go down, you buy more ETF shares. As soon as the prices turn positive again, the value of your portfolio increases automatically.

BET ON CFDS

CFDs are another way to bet on the trading of Space shares. CFDs are financial derivatives that are not based on direct trading in Space shares. They trade on the price development of the underlying assets. In this way, it is possible to trade in Space shares with significantly lower capital sums than with a direct investment.

CFD trading offers you as an investor another advantage: the possibility to trade long and short. In other words: CFDs allow you to take advantage of rising and falling prices. One of the special features of contracts for difference is the leverage effect. Here the possibility is offered to move large sums on the markets with a low capital investment. Example: A leverage of 10:1 means that as a CFD trader you can move a position of 10,000 Euro on the market with 1,000 Euro.

Which levers can you use to trade Space shares? At this point, the asset class you trade on is decisive. For shares, there has been a 5:1 upper limit for CFD leverage in the EU for some years now. If you are more interested in indices, the decisive factor is whether major or minor stocks are traded. The leverage at this point is between 20:1 and 10:1. Attention: Leverage products are always a double-edged sword. Just as a profit is leveraged, so too can a loss increase due to the leverage effect.

Trade Space stocks: Tips for broker selection

To trade on Space shares, you not only need to know which asset class you want to trade. The selection of the right broker is crucial. Beginners often decide primarily on the fees. In practice it is important to put the whole package to the test. Therefore, here are a few tips for selecting the broker for trading on Space stocks.

BROKER TIP NO. 1: DEPOSIT AND TRADING FEES

The cost of trading is an essential aspect in the choice of broker. Two points are decisive at this point: On the one hand the custody account costs, on the other hand the fees for the trade. Attention: At this point the classical share and CFD brokers differ from each other. Many brokers have now moved into a positive direction for investors when it comes to custody account costs: securities accounts are managed without custody account fees. The trade with space shares is different. Here fees are still the order of the day.

The trading fees are settled according to the flat rate or commission model (in connection with a fixed fee). Attention: In the area of CFDs, as a trader you must pay attention to the spread – the difference between the buying and selling price. In practice, it can be seen time and again that the trading commission is often much more noticeable than any trading costs.

BROKER TIP NO. 2: ASSET CLASSES OF BROKERS

Trading space stocks in direct investment requires that brokers allow stock trading. Investors who want to bet on CFDs or funds must check whether brokers offer trading on these asset classes. Contracts for Difference, as highly speculative instruments, are usually only offered by specialized brokers. Important: If trading with CFDs is possible, this does not mean that space shares are also included. As an investor you have to deal very carefully with the portfolio of tradable assets.

BROKER TIP NO. 3: CHECK THE PERFORMANCE OF THE TRADING PLATFORM

The broker test must also focus on the performance of the trading platform. The trading desk is always the heart of the platform. Decisive factors are the usability, selection of indicators and the possibilities for placing different orders. Background: When trading Space shares, you as an investor can limit losses by means of share orders such as stop loss or the trailing stop loss.

The trading platform must be easy to use even for beginners, but may still lose some of its performance. Especially the possibilities for chart analysis and the adjustment of the price chart play an important role at this point. Without indicators such as MACD, RSI or the Bollinger bands, it will be difficult for you to evaluate the prices and identify trends.

BROKER TIP NO. 4: ALWAYS CHECK THE CUSTOMER SERVICE

Unfortunately, the customer service quickly falls by the wayside. Support is extremely important for the evaluation. Software errors or server crashes are just as big a problem as difficulties with payments to the clearing account. In practice, many investors unfortunately only notice weaknesses in support very late.

For an evaluation, it makes sense to “put the broker to the test” before registration. Test inquiries usually show very quickly how well the broker is reachable and how competent the customer service is. In order to get to the top in the broker comparison, e-mail support is no longer sufficient in our eyes. A direct channel via live chat or the hotline should definitely be obligatory – just like an added value via the FAQ.

Conclusion: bet on the future with space stocks

For a long time, space travel remained of rather secondary importance for investors. One reason: The conquest of space was a matter for the two power blocs during the Cold War. In the meantime, space travel has become a market worth billions for companies – both in terms of the development of launchers and satellite technology or subsystems. While some space pioneers such as SpaceX still shy away from going public, many aerospace companies are interesting for investors – and can be traded both as classic direct share investments and in the form of CFDs.

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