Last year saw a record year of private capital invested in space, with a 60% increase to US$12.4nm, amid a year of long-awaited breakthroughs from the industry.
These included headline-grabbing space tourism for Sir Richard Branson’s Virgin Galactic Holdings Inc (NYSE:SPCE) and Jeff Bezos’s Blue Origin, as well as new rocket achievements from Elon Musk’s SpaceX, along with a number of public listings on both sides of the Atlantic for space-related companies, including Spire Global Inc (NYSE:SPIR), Arqit Quantum Inc (NASDAQ:ARQQ) and AST SpaceMobile Inc (NASDAQ:ASTS).
With ‘space’ becoming more widely accepted as a new investment asset class, one of those public market newcomers in London, Seraphim Space Investment Trust PLC (LSE:SSIT), said it believes 2022 is likely to see continued momentum in investment and public interest in the area of space tech that is its specialist domain.
This is one of seven space predictions for 2022 that the investment trust has set out.
Momentum in space
With public interest remaining high in mega-rocket launches, including the latest launch by SpaceX last week, Seraphim expect this momentum to continue in 2022 “as space is at an inflection point”.
“Significant new capabilities in satellite communications and Earth observation are coming online that could disrupt traditional industries and create new ones. We believe public enthusiasm for Space will remain high with the launch of new mega-rockets in the coming year.”
Big rocket launches to look out for in the year includes NASA’s giant Artemis 1 moon rocket (launching in March or April) and SpaceX’s next-generation Starship, which both plan to take humans back up to the moon, with the intention of one day extending these trips all the way to Mars, not to mention Boeing’s Starliner, and NASA’s Psyche mission and asteroid-targeting DART.
Countries including South Korea, Japan, India and UAE are planning to launch their first missions the Moon.
Seraphim perceives growing relevance for space companies tackling climate change and environmental, social and governance (ESG) issues.
The explosion of new geospatial data and development of analytics have become increasingly relevant to solving big problems related to climate change, with companies operating in this area including Planet Labs (NYSE:PL), Spire, ICEYE, Tomorrow.io, GHG Sat, Scepter Air and Pixxel SatelliteVu, Cervest, Sust Global and RS Metrics.
Not only is this wide choice of higher-resolution, frequently updated space data is enabling new applications to monitor and track objects and activities on earth, but earthbound companies are also using space tech in the rush to calibrate their ESG performance the large and growing investor and regulatory pressure.
“Space data provides powerful tools to help institutions establish a baseline to monitor their operations at scale and track their progress and carbon footprint over time,” says Seraphim.
“We expect to see more space companies tackling climate change in a wide range of applications such as green-house gas detection, building energy efficiency, weather forecast, environmental monitoring, supply chain optimization, precision agriculture, efficient routing of air and maritime traffic and more.”
More space SPACs
A number of space companies listed in the past few years via a merger with a special purpose acquisition company (SPAC), including Virgin Galactic, Momentus Inc (NASDAQ:MNTS), Rocket Lab USA, Astra Space Inc, Spire Global and Planet Labs (NYSE:PL).
“Although going public via SPACs in 2022 will be more challenging for space companies, we still expect this market to continue to develop with emerging category leaders that have demonstrated solid commercial traction and growth, especially communications and climate related companies,” says Seraphim.
Almost all of the nine space companies that went public last year saw their share price traded down due high shareholder redemptions.
“While the stronger ones are leveraging their position for M&A, we expect the weaker ones to become acquisition targets in the upcoming wave of consolidation.”
Satellite communications growing and consolidating
Massive increases in satellite communications (satcom) capacity will drive further consolidation in the industry too, reckons Seraphim.
Global satcom capacity is expected to increase by more than five-fold to over 20 terrabites per second (Tbps) this year, according to Euroconsult, as long-planned powerful satellites come on-line from major operators ViaSat, Eutelsat and Hughes, while new low-earth orbit (LEO) mega-constellations such as those from SpaceX’s Starlink and OneWeb are also gearing up for commercial services
“While we see strong demand for broadband, mobility recovery and growing applications for autonomous vehicles and Machine-to-Machine/IoT (Internet of Things), operators still need to close their business case in a fragmented market with many technologies and spectrums.
“We expect to see further consolidation as operators try to scale and position themselves for growth.”
Earth under observation
Like satcom, the Earth observation (EO) industry is rapidly transforming with new technologies and will see a significant increase in capacity and modalities in the coming year.
Companies such as Maxar are launching constellations that will deliver high-resolution optical imagery with revisit rates up to 15 times per day, more than tripling its capacity, while Planet Labs is planning to double its imaging capacity with the launch of 44 SuperDove satellites.
Seraphim expect to see a significant increase in commercial SAR (Synthetic Aperture Radar) technology, which enables highly accurate measurements of geophysical factors to be made, with more than half a dozen smallsat SAR companies expanding their constellations.
“Companies like Tomorrow.io, SatelliteVu and Pixxel are planning to launch their first EO satellites, making new modality of weather, infrared and hyperspectral data available to the commercial market for the first time, enabling new capabilities to deliver better customer solutions.
“We see this trend driving further horizontal and vertical consolidation, especially for well-funded optical EO players to acquire a complementary constellation like SAR, to enhance its product offerings.”
Clouds in space?
Since the start of the pandemic, the idea of cloud technology has gone mainstream and Seraphim sees the next step for players such as Amazon.com’s AWS and Microsoft’s Azure, currently Earth’s largest cloud service providers, is to accelerate their reach into space in 2022.
AWS, which established a dedicated space unit in July 2020 and has partnered with Seraphim’s sister company on a space technology accelerator programme, is seen as likely to rapidly transform the space industry by helping accelerate space companies grow.
Graduates from the Seraphim AWS Space Accelerator such as Ursa Space, HawkEye 360 and LeoLabs have since rapidly scaled their business and found new partners with which to collaborate, Seraphim says.
As part of its Project Kuiper, Amazon is also investing more than US$10bn to build a network of over 3,000 satellites to deliver broadband connectivity, planning to launch its first satellites in late 2022.
Microsoft’s Azure also launched a space business in 2020 and has a partnership with SpaceX Starlink, stating they believe every one of their enterprise customers could benefit from space and that space technology can improve every industry.
A need for global leadership
The growing congestion in earth’s orbit, rising tension between US and China, and the recent Russian weapons test that led to highly destructive debris flying around Earth, has all served to highlight the growing risk of collisions in space.
China last year exceeded the 56 orbit launches by the US and the People’s Republic is now jockeying for global leadership and corporate partners to develop the Moon, not to mention the space activities of India and the UAE.
“While global leadership and cooperation are urgently needed to promote norms and maintain a sustainable space ecosystem, the chances of cooperation between the US and China are likely slim due to ongoing national security concerns and rising geopolitical tensions and competition in space,” Seraphim says.
In the coming year, a new United Nations resolution on “norms of behavior” represents an opportunity for leading space powers to come together and reach consensus to reduce risk in space, the investment trust says.
“We expect to see more private sector companies such as LeoLabs, Astroscale and D-Orbit stepping in to fill in the gap and provide services include Space Situational Awareness (SSA) and space debris removal and in-orbit services.”
Story by ProactiveInvestors
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