UBS have published a lengthy report on the investment potential of space tourism and the space economy. A far cry from its sci-fi origins, researchers from the Swiss multinational investment bank have forecasted bullish prospects for commercial space travel and its offshoot technologies.
Currently valued at around $400 billion, the firm’s analysts believe space tourism will become a dominant $805 billion industry by 2030.
Fuelled by aggressive private investment and the ego contests of billionaires, innovations in commercial space technology have transformed space tourism from a pipe dream into a viable investment opportunity.
“While space tourism is still at a nascent phase, we think that as technology becomes proven, and the cost falls due to technology and competition, space tourism will become more mainstream, with the potential for listed companies to exploit” UBS analysts Jarrod Castle and Myles Walton wrote.
The most interesting discussion point raised in the UBS report surrounds the potential for the space travel innovations to “cannibalize” the long-haul commercial flight industry.
The UBS research suggests commercialisation and cost reduction of point-to-point flights on rockets, the kind frontrun by Elon Musk’s SpaceX, could significantly disrupt established aviators.
SpaceX claim their Starship rocket would be capable of flying passengers from New York to Shanghai in just 39 minutes, a vast improvement on a journey that currently takes 15 hours.
UBS believe this high-speed, out-of-atmosphere travel option could represent an annual market of over $20 billion.
“Space tourism could be the stepping stone for the development of long-haul travel on earth serviced by space,” the UBS analysts commented.
“Although some might view the potential to use space to service the long-haul travel market as science fiction, we think … there is a large market.”
“The associated threat or opportunity from this theme would depend heavily on how these companies move and shape their business models accordingly.”
Opportunities for investment on the ASX
ASX focused investors have only a small pool of options for their space stock ambitions.
Electro Optic Systems Holdings Limited (ASX: EOS) is one Australian technology company focused on space and defence markets.
EOS offers a wide variety of tech, from laser satellite tracking systems to the manufacture and sale of telescopes and dome enclosures.
The company’s stock price sits at an impressive $2.87, having grown nearly 15 percent since late December 2018.
Another contender is London headquartered Sky and Space Global (ASX:SAS).
Sky and Space aims to launch a constellation of some 200 nanosatellites into Low Earth orbit over the equator to help provide data coverage and communications networks to under-serviced regions along the equatorial belt.
In February 2018, Sky and Space raised $12 million in a two-tranche share placement to investors, which will help drive the company towards its launch with Virgin Orbit slated for mid-2019.
The Sky and Space stock is currently trading at $0.03, having dropped 44.2 percent since the start of the year.
Another player vying for stake in the space economy is Luxembourg-based satellite company, Kleos Space (ASX:KSS).
Making similar use of nano-satellite technology, Kleos’ ambitions are set on providing a maritime security service to help disrupt illegal fishing, smuggling, trafficking and border challenges.
Currently trading at $0.21, the company’s stock price has jumped 110 percent since the mid December.
When considering the small handful of ASX listed space companies, alongside an absent pool of dedicated Australian space tourism ventures, the bullish predictions of the UBS report might point to a gap in the market for investors.
This content does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.
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