Not surprisingly, the SpaceX initial public offering (IPO), which is expected to shatter records, is expected to have secondary effects, including in the world of exchange-traded funds (ETFs).
One of those effects is the universe of space ETFs, which has done quite well for itself in terms of assets under management, is experiencing some population growth ahead of the much ballyhooed IPO by Elon Musk’s rockets and satellites company.
Say hello to the Global X Space Tech ETF (ORBX). That ETF came to market on Tuesday, April 14 and tracks the Global X Space Tech Index. It doesn’t feature exposure to SpaceX (some ETFs do), but that could change in the future. However, it does meet the moment when it comes to the rising intersection between the space economy and technology.
Home to 28 stocks, the new ETF’s roster “includes companies involved in the development of rocket launch systems and reusable rockets; the production of mission-critical space technology and components, including engines, orbital transport systems, software, and data solutions; the delivery of satellite-enabled telecommunications and data services; and the provision of space transportation, tourism, and exploration services,” according to the issuer.
ORBX Orbit May Be Something to Behold
Thematic ETFs, of which ORBX is one, often endure criticism, but what’s undeniable is that point that space is entering its commercial phase and the related economic expansion could be measured in the trillions of dollars.
(Image Courtesy: Global X)
Among the reasons so many market participants are excited about the SpaceX IPO is that company’s emphasis and success with rockets and satellites, which are the current staples of the space economy. ORBX leans into that theme.
“One group is transforming launch services, turning access to space from bespoke aerospace engineering into repeatable logistics,” notes Ido Caspi of Global X. “The other is monetizing that infrastructure through satellites and the downstream services and applications built on top of them. Satellite-enabled solutions could account for roughly 63% of total space revenues by 2034, reflecting higher constellation density and the expansion of new service layers built on orbital infrastructure, such as broadband internet.”
Favorable Economics Could Be Outstanding for ORBX
Another compelling factor in the space investing thesis is that the economics are getting better. Just 15 years ago, it cost NASA $54,500 per kilogram to reach low earth orbit (LEO). Today, one of SpaceX’s ships can get the job done for barely more than $2,700 a kilogram. Better economics mean more launches, which can benefit space companies, including ORBX components.
(Image Courtesy: Global X)
Increased launches have tangible benefits because they provide clarity for the company’s behind those events and suppliers. That increased predictability can matriculate to investors, including those engaging with ETFs such as ORBX.
“The commercial launch market is projected to grow to nearly $70 billion by 2035, representing a 13.4% compound annual growth rate (CAGR) from 2025.12 The continued deployment of broadband constellations and the buildout of resilient defense architectures that require tactically responsive and assured access to orbit are likely to drive this growth,” concludes Caspi.
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