Blast off: Wall Street loves space stocks – and Branson’s flight gives them a boost

Billionaire Richard Branson’s successful trip to space is fueling enthusiasm among investors who see an industry primed for takeoff.

And space stocks are becoming increasingly popular, especially among everyday investors. According to Vanda Research, Virgin Galactic is currently the fourth most bought stock among retail investors. Additional hype may be drummed up by Amazon CEO Jeff Bezos, who plans to make his own trip to space on July 20 aboard a rocket ship made by his company Blue Origin, which is private.

Space infrastructure stocks could be primed for a rally, too. Last month, Goldman Sachs initiated coverage of Maxar Technologies, which specializes in high-resolution Earth imagery, with a “buy” rating. Shares are down more than 7% this year to $35.67, but Goldman thinks they could hit $52 over the next 12 months.

“Earth observation data and analytics are increasingly prioritized by government and commercial customers,” analyst Noah Poponak said. “New competitors are coming to this market but we think they are far behind [Maxar].”

Meanwhile, money is flowing into the industry. According to data from PitchBook, there are now at least eight space tech companies that have completed or are planning to go public by merging with “blank check” companies. That’s the route Virgin Galactic took to go public in 2019.

Space tech startups raised $5.5 billion in VC funding last year. Per PitchBook, that was a record — and 2021 is on track to surpass it.

The Virgin Galactic founder’s flight over the weekend aboard a spacecraft he helped fund was a landmark moment for the commercial space industry. The up-and-coming sector has for years been looking to make space tourism a viable business.

That moment has yet to arrive. But Branson’s journey is feeding optimism. Virgin Galactic’s stock is up more than 7% in premarket trading on Monday. Shares had already skyrocketed 107% year-to-date, valuing the company at nearly $12 billion.

In a note to clients last week, Cowen analysts said they were bullish on Virgin Galactic, citing its test flight schedule and regulatory approvals.

With Branson’s journey in the books, Cowen said it was “more positive about the prospects of a successful commercial spaceflight program in 2022,” noting that the company’s “visibility, marketing programs [and] ticket sales should support [its] valuation,” even though it remains unprofitable.