By Edmond de Rothschild
SpaceX’s initial public offering (IPO), scheduled for 12 June, has reignited investor interest in the space sector.
The sector offers enormous commercial potential for telecoms operators, defence companies and data processing infrastructure providers. The total potential market is estimated at $1.8 trillion by 2035, and whilst it could be much larger, it is difficult to calculate at this early stage.
The main bottleneck lies in launching spacecraft into space, the cost of which must continue to fall for the commercialisation of space to be economically viable. It is precisely this fall in costs—which have fallen by more than thirty-fold over the last forty years—that distinguishes the current cycle from previous episodes of enthusiasm surrounding the sector.
Although putting spacecraft into orbit involves high initial investment costs, the operational costs of space activities could end up being considerably lower than those of activities carried out on Earth.
Space offers advantages such as the absence of gravity, abundant solar energy, natural cooling and an operational environment not limited by geographical borders.
Likewise, it presents risks and disadvantages, such as exposure to radiation and extreme temperatures, the management of remote maintenance and waste disposal. The explosion of Blue Origin’s New Glenn launch vehicle on its launch pad on 28 May served as a reminder that industrial risk remains ever-present, even for the most established players.
Although governments have clearly embarked on a new space race, potential barriers to commercialisation remain, both regulatory and industrial.
The imminent IPOs of companies purely focused on space are increasing the number of investment vehicles available. However, investors should maintain a selective approach and prioritise diversified exposure, whether through ETFs or established companies with partial exposure to this sector.
In the very long term, concepts that remain speculative today—such as the space elevator, a lunar base as a gateway to the solar system, the colonisation of Mars or asteroid mining—are shaping the sector’s futuristic outlook. They do not currently drive valuations, but represent a very long-term option whose value depends entirely on the cost of access to orbit continuing to fall.
