New Investment Trends (Commercial Space Industry)

We are talking about investment trends, and the biggest growth trend going on right now is in the commercial space industry. Watch now!

New daily live streams 8:00pm MST on my other YouTube channel here: https://www.youtube.com/channel/UCyA6hunVgBiE3QEDn9GpQtw

VIDEO SUMMARY

If you watch my channel, you know I never give investment advice on here. I do not pick specific stocks to recommend. There are plenty of other places online you can get that information. What I want to talk about is the overall investment trends, and then you can figure out your own specific investments.

The biggest growth trend going on right now is in the commercial space industry. I talk about the space industry a lot. In fact, they are some of my least watched videos. But I keep making them, because this is so important. I feel like not enough people realize what is going on. The information is all out there, but people are not connecting the dots to investment opportunities. The business landscape is changing fast, and if you do not pay attention, you are going to get left behind.

What is going on in the commercial space industry that has me so worked up? I want to look at this from four different angles:

  • Industry
  • Venture Capital
  • Geography
  • Spaceports

Starting with the industry trends. Something that is unique about the space industry is that it is so young. Most of these companies have not been around that long. So there is a lot of uncertainty around forecast information. A lot of different companies have released forecasts for the space industry. And when you look at these forecasts for 5, 10, and 20 years into the future, they all come up with different results. For that reason, I want to stay away from forecast information, and focus more on what has actually happened.

Let us start with the industry. The space industry today is huge. A report by the Satellite Industry Association valued the space economy at $348B in 2017 (Space News, July 5, 2018). All these articles will be linked in the description box below. A large driver behind this market is satellites. Satellites are getting smaller and cheaper. And they are not just funded by governments. Half of smallsats launched in the last six years provide commercial services. Six times the number of smallsats were launched in 2018 versus six years ago in 2012. (Bryce Space and Technology, 2019).

Industry Reports:
https://spacenews.com/a-trillion-dollar-space-industry-will-require-new-markets/

https://brycetech.com/downloads/Bryce_Smallsats_2019.pdf

So when you just look at what has happened, the space industry is massive and growing. This is going to change all our lives tremendously. Just think about cell phones, GPS, weather monitoring, military operations, banking transactions… they all rely on satellites in space.


Everyone thinks space is important. Here is the next question: is there money to be made in space? The answer is yes. And you do not need to take my word for it. One thing I do is watch where Venture Capitalists are putting their money. Venture Capitalists answer the question for a living of what is the return on investment. If you look at money flowing into new space startup companies, you see massive growth. One example to look at is Space Angels. Space Angels is a Venture Capital firm that specializes in investments in space companies. To be clear, I am not advertising them as an investment firm. I only bring them up because they release an industry wide financial report. Space Angels just released their report for 2018, and they reported that in the last ten years venture capital funds have invested 4.2B into Space companies, with 70% of that capital deployed in the last three years. Not only is there venture capital investment going on, it is speeding up.

(Space Angels Quarterly Q4 2018)

https://www.spaceangels.com/post/space-investment-quarterly-q4-2018

https://spacenews.com/space-startup-investments-continued-to-rise-in-2018/

Let us talk now about geographical trends, and I want to focus specifically on Southern New Mexico. For the sake of full disclosure, I am the Chief Financial Officer at Spaceport America, the world’s first purpose built commercial spaceport located in Southern New Mexico. So I am a little bit biased. But because I know this region so well, I want to talk about what is going on.

Almost exactly one year ago, I posted a video on business strategy and explained why Southern New Mexico is strategically positioned for growth in the commercial space industry. Here we are, one year later, and what has happened? I think one of the easiest economic indicators you can look at is home prices. Home sales in Southern New Mexico have increased 30% higher than sales recorded in the last five years. (Las Cruces Sun News, Dec 23, 2018) The Average home sales price has jumped 10% since last year. (Las Cruces Sun News, Dec 15, 2018) This region is growing, and since it is located next to White Sands Missile Range and 6,000 sq miles of restricted airspace, it has been built around the space industry for decades.

Las Cruces Sun News articles on home prices:

https://www.lcsun-news.com/story/money/business/2018/12/23/new-mexico-housing-market-sales-beat-national-trends/2402269002/

https://www.lcsun-news.com/story/money/business/2018/12/16/average-home-sale-price-tops-220-000-november/2318378002/

Let us switch and talk about spaceports, because sitting at the heart of this region is Spaceport America. I am not trying to sell you anything here, because you cannot invest in Spaceport America. It is owned and operated by the State of New Mexico. Think about Spaceports like you would an airport. It is a facility owned by the government that leases terminals to different spacelines. Here is why spaceports are important. We do not just deal with one space company. We deal with all the space companies. You can look to spaceports as a barometer for what is going on in the industry. Well Spaceport America just released annual financial statements. You can download them online and customer revenue increased 53% year over year from 2.1M to 3.3M. (Spaceport America Annual Report FY2018) Spaceports function as a port to reach space, and commercial activity is speeding up.

Spaceport Financial Report:https://www.saonm.org/media/audits/495_New_Mexico_Spaceport_Authority_FY2018_Final.pdf

So in summary, looking at the financial information from last year we can evaluate four different perspectives. First, the industry as a whole is growing. Second, venture capital firms are investing large amounts at an increasing rate. Third, you can look at geographical regions like Southern New Mexico and see that economic indicators are pointing to growth, and fourth the activity at spaceports is also speeding up. The point of this video is to say “Wallstreet, wake up.” The commercial space industry is here and it is taking off.

Let me end with one more thought. This is purely anecdotal. I was born in Mountainview, CA, the center of Silicon Valley, before it became Silicon Valley. Back then in the 80s, there were orchards everywhere.  When I look back on what Silicon Valley was like before the economic success, there are shocking parallels between Silicon Valley in the 80s and Southern New Mexico today.

  • Great weather. Both locations have great weather.
  • Orchards. Both locations have a strong agricultural economic base.
  • Infrastructure. Both locations have well designed, new infrastructure.
  • Government R&D Labs. Both locations have large government R&D Labs producing new technology.
  • Proximity to Military Bases. Both location shave proximity to Military Bases.
  • Government contractor Industry Hubs. Both locations have strong presence of government contractors
  • Low Cost of Land. Silicon Valley in the 80s had much more affordable land available to acquire, much like New Mexico today.

These are the elements you need for rapid economic expansion. Except Southern New Mexico has one thing Silicon Valley did not have… Spaceport America sitting right in the middle.

So if you are in the investment community, I hope this has raised your awareness of what is going on in the commercial space industry. My goal is just to get you to pay attention, because there are exciting things going on, and you do not want to miss it.

Leave a comment down below letting me know what you think!

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Neither Zach De Gregorio or Wolves and Finance Inc. shall be liable for any damages related to information in this video. It is recommended you contact a CPA in your area for business advice.

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