Space Tourism Set to Become a Craze in 2020: Stocks in Focus

The space tourism sector is heating up with the major players getting close to their goal of delivering various forms of commercial spaceflight by 2020.

Notably, NASA’s decision to open up the International Space Station for tourism and other private ventures from 2020 is a key catalyst in expanding the scope and market of space tourism.

Space Tourism Prospects Aplenty

Space tourism, also known as “citizen space exploration” or “personal spaceflight”, has become an attractive space due to strong consumer spending.

However, the biggest roadblock for the success of space tourism is the high cost of travel. Notably, a trip to the International Space Station will cost around $35K per day of stay while a return ticket will cost around $60 million.

The cost of getting into space will decline if the next generation of space planes can reach the orbit, making it an economically feasible option for a larger customer segment. This will also help the market to expand rapidly.

Per marketstudyreport.com data, cited by MarketWatch, the space tourism market is expected to be worth $1.18 billion by 2024, witnessing CAGR of 16.6% between 2019 and 2024.

This is why companies like Amazon AMZN backed Blue Origin, Tesla TSLA backed SpaceX, Virgin Galactic Holdings SPCE and Boeing BA are taking a number of initiatives to gain a foothold in this promising space.

Stocks in Focus

Amazon

Amazon backed Blue Origin’s offering is based around a more traditional rocket (the New Shepard), which takes off and lands vertically, and its objectives include orbital spaceflight.

The space tourism company has performed several test flights, the most recent one on Dec 11, and is planning to put paying passengers into space by 2020. The company’s plan is to place up to six passengers on each flight, with tickets expected to cost around $200K to $300K per person.

Moreover, the company has teamed up with aerospace giants Lockheed Martin LMT, Northrop Grumman NOC and Draper in an attempt to build a lunar landing system to meet the
U.S. government’s goal of taking humans to the moon by 2024.

Virgin Galactic

To date, Virgin Galactic has been the main competitor for Blue Origin in terms of sub-orbital space tourism. Its current space plane, VSS Unity, entered outer space in December 2018 as part of its testing process, with two additional space planes in development in Mojave, CA.

Tickets currently cost $250K per person and more than 600 people from 60 countries have reserved seats.

However, the company has been facing headwinds over the space flight. Virgin Galactic originally aimed to deliver space flight by 2009 but it got delayed. In 2014, the company’s first spaceship VSS Enterprise crashed, resulting in the death of its co-pilot, Michael Alsbury.

Tesla

Tesla backed SpaceX already has experience when it comes to launching space-bound flights and the company is hoping to get on board the space tourism bandwagon.

However, unlike other companies in this sector, it is prioritizing lunar tourism and other forms of space tourism extending beyond Earth’s orbit.

Notably, in September, SpaceX unveiled Starship MK1, its new starship that will be able to carry up to 100 people to the moon, Mars or other destinations in space or around Earth.

Moreover, SpaceX is one of the companies that will choose clients and deliver them via its own rocket-and-capsule launch systems for the International Space Station trips starting next year.

Boeing

Boeing emerged as a major player in the space tourism industry when it entered into a deal with NASA as part of their Commercial Crew Development programme. This programme was designed to increase private sector involvement in the production of crew vehicles to be launched into orbit.

Notably, the company’s contract with NASA provides it with the opportunity to sell seats to space tourists. In October, the company also announced its plans to invest $20 million in Virgin Galactic.

Boeing is another company that will choose and deliver clients for International Space Station trips starting next year.

Zacks Rank

While Tesla carries a Zacks Rank #2 (Buy), Amazon and Virgin Galactic currently carry a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Boeing currently carries a Zacks Rank #5 (Strong Sell).

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