Evgeny Kireev

The space industry is one of the fastest growing industries in the world economy, and Space Tech is the exciting niche providing a constant flow of new technologies to feed it. You don’t get any more cutting-edge than Space Tech, so for investors who are passionate about innovation, it seems to tick all the boxes.

However, any potential investment needs to be assessed while considering the innate complexity and pioneering nature of the niche. Is Space Tech really “the final frontier” of tech investment, and what do you need to consider before climbing aboard the spaceship?

Sputnik to SpaceX

The Soviet Union’s 1957 launch of Sputnik 1, the first artificial Earth satellite, sparked widespread interest in space exploration and triggered the Space Race. Since 1969, when 600 million people across the globe watched Neil Armstrong’s milestone moonwalk, space technology has developed in leaps and bounds.

In more recent years, with SpaceX and the first commercial missions to the International Space Station, a universe of new possibilities has opened up for space industry investors. Data from Space Capital reveals that in the first quarter of 2024 alone, investment in the space economy grew 33% quarter-over-quarter to $6.5 billion across 103 companies.

It’s interesting to note that VC investors were responsible for around half the capital deployed, signalling strong investor confidence, but is it well-placed? 

Space Tech Benefits on Earth

We already rely heavily on space technology on a daily basis - satellite systems for our voice and data communications, and GPS navigation for precise location information. Observation satellites monitor natural resources, air quality and environmental change, and track and predict natural phenomena.

Our reliance on weather-dependent activities like aviation is increasing, so weather forecasting is becoming increasingly important, as is air traffic management. In the agriculture industry, prediction of natural phenomena optimises production and protects profits. Space mission technologies developed for cultivating and preserving food and purifying water have already been deployed for the benefit of millions of people on earth.

Space Tech is already deeply rooted into our daily lives, with immense potential for further development. This combination makes it a promising candidate for investment. 

Major Players to Watch

Space Tech presents an investor with a dazzling array of tech domains and companies. Among the top performers, Lockheed Martin is the historic player with a 100-year track record spanning from aircraft to satellites and space technologies. MDA is a Canadian developer specialising in satellite systems, robotics and geo-intelligence. The relatively young Rocket Lab, founded in 2006, manufactures spacecraft and satellite components, and provides launch services and in-orbit management.

 All this space activity requires highly specialised support services. Among the pioneers, Orbit Fab is a US startup that aims to introduce the first orbital fuel delivery service of hydrazine, a chemical used by many satellites, while Astroscale focuses on life extension for satellites already in orbit, end-of-life solutions for defunct satellites and the essential clean-up of space debris. AstroForge is a US company pioneering the uncharted territory of asteroid mining – a field that will be vital for life beyond Earth not to mention extremely profitable for those involved.

 The Space Industry’s Challenges and Impact

The space industry is challenges are absolutely unique, and those who develop the solutions will be game-changers and history-makers. Industry growth to date has been hampered by exorbitant costs, so it’s essential to develop more reliable and affordable ways to get cargo into low Earth orbit (LEO).

There is an increasing amount of potentially dangerous debris floating in space that needs to be managed. Few countries have ever actually sent people into orbit, so it will be a major challenge to develop the required infrastructure and training for safe and sustainable human habitation in space.

Space Tech has a significant impact on the technology sector as a whole – particularly on communications and defence, because it is often the point of origin for solutions that are subsequently used outside the space industry itself. This cross-applicability of certain space technologies implies even better potential for returns on well-researched investments.

 Market Potential for Space Tech 

The potential of Space Tech is vast and, because of the absolute novelty of the sector, can be tricky to quantify. It is growing rapidly, driven by multiple factors including the increasing demand for satellite-based services, the untapped potential of asteroid mining and the development of space tourism. According to a Morgan Stanley report, Space Tech’s market potential should reach $1 trillion by 2040. 

This presents a huge opportunity for all tech companies that can offer space-based services for civilian and commercial purposes, while the military sector is also expected to grow rapidly due to increasing global security concerns.

Space Tech Opportunities for Investors 

As a priority, the space industry needs to become more affordable, so investors would be well-advised to investigate cost-reducing technologies like reusable spacecraft and versatile small satellites (smallsats) which will be increasingly adopted for IoT and 5G networks.

The smallsats market alone is expected to reach $260 billion by 2029. Other key trends on the rise include robotic automation technology, which enables unmanned vehicles to explore the solar system and is already extensively deployed by the major space agencies, and AI which is being increasingly integrated into space-related activities such as mission design, navigation and data analysis.

The Future in Space

The US’s rapid commercialisation of space has transformed the landscape, and although other regions and countries are following suit, they are still in their relative infancy. It is unlikely that China will become an international space tech provider in the West, having become the US’s competitor in the modern space race, and both superpowers are heading for the moon.

Increased industry focus on lunar technology will further shape the Space Tech sector over the next decade, catalysing the development of even more advanced technologies for deep space transportation, lunar resource utilization and colonization which, in turn, means even more future opportunities for investors. 

Space exploration and investment have shared characteristics. Both require in-depth research, meticulous analysis, long-term vision and strategy to reach clear goals. By their nature they both entail risk, but also the potential for immense rewards. Will you join the space race?

Created to become the future "front page of the Internet," Reddit was launched in 2005 by roommates, Steve Huffman and Alexis Ohanian. The site officially launched in June of 2005. The initial idea sought for users to submit content and have their communities vote on what was submitted. The more upvotes a submission received, the closer it reached the front page of the main site, regardless of which community it was posted in. 

With the ability to remain anonymous and share potentially newsworthy content instantly, Reddit has also been at the center of multiple controversies. From incorrectly identifying the Boston Marathon Bomber to sharing leaked celebrity photographs, the site has not been without some negative attention. Despite negative press, the ever-growing social media community continues to remain a fixture for millions of people around the world.

Reddit goes public

Following Pinterest, Reddit has been the most recent social media platform to be publicly traded. It's also the first social media company to make such a move in half a decade.

Reddit debuted on the New York Stock Exchange in March under the ticker RDDT. The original plan was to raise nearly $750 million in the IPO - a plan which was in the works for years.

Reddit's strategy to ensure a successful IPO has been multi-faceted and four-pronged:

1. Community-building focus
2. Competitive advantage
3. Strong PR campaigns
4. Strong infusion of capital

This isn't a multi-stage plan. Reddit's strategy revolves around accomplishing these goals simultaneously. 

Reddit's IPO offers a unique gamechanger

Reddit is not the first social media platform to go public, though they are the first to freeze a portion of shares for 75,000 of their top-rated or most engaging users. Those site members were offered the shares at the IPO-reserved price originally set for investors. The Reddit team also plans to follow up on this with a tiered share allocation system. 

The idea behind these moves was to instill a sense of ownership for the users of the site. This new territory of allocating digital space and attributing ownership of it is quickly becoming a popular topic of discussion and analysis. The original launch plan saw 22 million shares go public between $31-$34 USD. Reddit's take on user ownership could potentially shift the way brands interact with their fanbase and customers. As shareholders, communities can now be rewarded with potential voting power on the site and on the direction it takes.

Hesitancy about Reddit's IPO

Despite achieving its goal of being on the front page of the internet and boasting large daily numbers, Reddit has never turned a profit. The shift from being a private to a public company now brings added pressure on the site to begin turning profits. If the investors aren't happy, the share price could quickly drop.

There is potential for the site to  turn to a more advertising-based revenue strategy, however some are concerned that this could negatively affect users’ experience and Reddit's communities could take their activity to other, less crowded platforms. Reddit also lacks the same market saturation as both Google and META. Even though the majority of Reddit's revenue comes from advertising among its myriad of communities, the capital structure isn't sufficient enough to give ample voting power to the IPO's initial investors. The difference between the voting power in Class A and Class B shares (10x the power of Class A shares) affects their worth.

Given that social platforms are ever-changing, Reddit is exploring innovative new ways to generate revenue. Data licensing for the AI industry has been one avenue they've been exploring. Reddit's foray into AI data licensing will also build a bridge with Google, who can pay Reddit for access to the platform's posts and utilise them as training material for new AI models.

Even if it proves to be a positive financial gain for the site, there are multiple communities against Reddit's adjustment towards further monetization. Despite some users against Reddit's new public face, the IPO has launched at a time when social networks are evolving into investable platforms.

What's the best action to take?

Social media is a staple in our lives and it's hard to imagine it going away anytime soon. Reddit's IPO is a perfect example of the current landscape as social media platforms continue to grow into even more significant businesses. Reddit’s unique content and voting structure, which has given the company enough of a USP to attract vast user numbers and thus a lot of potential for monetization - an important aspect for prospective investors. My advice? If you’re thinking about adding Reddit to your portfolio, perhaps give the company a quarter before investing. It's best to watch and see if this move can exceed everyone's expectations before making any big decisions.