This past week, the market witnessed a strong rally in many space stocks, with some companies seeing gains of over 20%. According to analysts, this surge is partly attributed to the so-called “Trump-Elon Effect,” referring to the connection between President-elect Donald Trump and SpaceX CEO Elon Musk.
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A Unique Bond: Trump and Elon Musk
Andrew Chanin, CEO of ProcureAM, which manages the space-focused UFO ETF, shared with CNBC:
“No one can downplay the significance of this catalyst. We’re talking about the most influential figure in space industry history and the ear of a president-elect who previously deemed space important enough to create an independent branch of the military.”
This connection has instilled significant confidence in the market, fueling exceptional growth for many space stocks, including Rocket Lab, Intuitive Machines, and Spire Global.
Remarkable Growth in Space Stocks
Over the past week, leading space stocks have recorded impressive gains:
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- Rocket Lab: +41%
- Intuitive Machines: +28%
- Spire Global: +26%
- Planet Labs: +16%
- Redwire: +15%
- AST SpaceMobile: +10%
These gains were driven by strong third-quarter earnings and company-specific updates, such as Rocket Lab’s progress on its Neutron project and Spire Global’s sale of its maritime business to reduce debt.
Growing Optimism in the Space Industry
According to Andres Sheppard, an analyst at Cantor Fitzgerald, this rally reflects post-Trump election optimism in the industry. He stated:
“There’s clearly a risk-on rally tied to Trump’s victory, particularly in the space sector.”
Year-to-date, several space stocks have rebounded from post-SPAC malaise, tripling or even quadrupling in value during 2024.
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“Space has been one of the best-performing sectors in the market this year,” Sheppard noted.
He emphasized that this growth is underpinned by long-term factors such as the Artemis program, which aims to return U.S. astronauts to the moon, and Elon Musk’s ambitious Mars colonization goals.
The Impact of SpaceX and Lower Costs
Although SpaceX remains privately held, its dominance in rocket launches and satellite broadband benefits other companies in the industry.
“Everyone benefits from lower costs of accessing space,” Chanin said.
Interestingly, while newer companies like Rocket Lab and Spire Global thrived, legacy players like EchoStar and Viasat saw declines of more than 10% this week.
A Changing of the Guard in Space
Alex King, CEO of Cestrian Capital Research, observed that the divergence signals a generational shift in the space industry.
“The need for legacy businesses is declining. Space is undergoing a slower evolution similar to tech, where low cost always wins in the end.”
King also noted that the market is now evaluating which companies have long-term potential and which do not.
Bright Prospects Ahead
Despite the substantial year-to-date gains, Sheppard remains optimistic about the sector’s future growth. “Market sentiment has been and continues to be very bullish,” he said.
This aligns with the view of Rocket Lab CEO Peter Beck, who expressed confidence that the Trump administration’s continued focus on space will sustain the sector’s momentum.
“When space wins, Rocket Lab wins,” Beck asserted.
Conclusion: A Golden Era for the Space Industry
The “Trump-Elon Effect” has brought renewed enthusiasm to the space industry, from surging stock prices to growing interest from institutional investors. With ambitious programs like Artemis, reduced access costs, and active participation from companies like Rocket Lab and Intuitive Machines, the space sector is entering a new golden era.
While risks remain, such as the divide between legacy and newer companies, the industry’s future appears bright. Companies that adapt quickly and seize emerging opportunities will lead the charge in an increasingly dynamic and competitive market.
