Space Industry: How to Invest, Which Companies and Which ETFs

Elon Musk says humanity must become multiplanetary. Jeff Bezos has bet billions on Blue Origin. And you sit at your computer wondering: does it make sense to stake your savings on this story? Let me be direct — the space industry is one of the most fascinating and simultaneously most risky sectors a retail investor can enter today. Let's break it down without unnecessary embellishment.

Who actually makes up the "space industry"?

Whenever someone says space investing, most people picture SpaceX. But SpaceX is private — you can't buy it on a stock exchange. What is available to retail investors is a more colourful and wilder mix of companies with different business models, different stages of maturity and different degrees of dependence on a single customer or single technology.

• Rocket Lab (RKLB) — a New Zealand-American company that launches small satellites on demand. It has an operating track record with dozens of successful launches, but profitability remains a distant prospect. The company is investing in development of the mid-sized Neutron rocket, which aims to bring Rocket Lab closer to SpaceX — increasing both the potential and the burn rate simultaneously.
• Redwire (RDW) — a supplier of hardware for space missions: solar panels, robotic arms, construction technology for orbital stations. Smaller, less liquid, speculative. The order book depends on government contracts from NASA and defense programs.
• L3Harris Technologies (LHX) — a different breed. An established defense contractor with billion-dollar contracts from NASA, the Pentagon and allied militaries. Space is only part of its business, but a stable and predictable part.
• Northrop Grumman (NOC) and Boeing (BA) — major players with space programs, but their shares don't track space purely. Boeing additionally carries the burden of problems in civil aviation, which complicates the sector thesis.
• AST SpaceMobile (ASTS) — building a satellite constellation for direct mobile connectivity without the need for special hardware. Purely speculative, but an interesting pure-play on broadband satellite internet.

This is important to understand: there are only a handful of pure-play space stocks on the exchange, and most of them are either early-stage or defense conglomerates. Pure plays like Rocket Lab or Redwire are what Wall Street calls "high-risk, high-reward" — and both parts of that phrase apply. Don't expect stable dividends or calm quarterly results.

ETF ARKX vs. UFO: what is the difference?

For those who don't want to pick individual companies, there are ETFs with direct exposure to the space sector. But their philosophies differ fundamentally, and that matters.

ARKX — ARK Space Exploration & Innovation ETF from Cathie Wood. An actively managed fund that holds both pure space companies and related technologies (drones, autonomous vehicles, 3D printing). The TER is significantly higher than passive funds — check the current figure on justETF. The period 2020–2022 showed what active management in this segment means — the fund first exploded upward, then collapsed. Volatility is not just a number in the prospectus; it is reality you must be psychologically prepared for.

UFO — Procure Space ETF, a passive fund tracking the PROCURE SPACE index. It holds exclusively companies with direct space exposure — at least half of revenues must come from the space business. No "related technologies." Liquidity is lower than ARKX, the trading spread larger. It is available on US exchanges, but as a UCITS version for European investors the offering is limited — check with your broker whether they have a UCITS equivalent.

Neither of these ETFs is a tool for the core of a portfolio. Illustratively: an investor with a portfolio of 500,000 CZK might allocate roughly 25,000–50,000 CZK to such a fund, that is 5–10 %. More would mean risking that the sector's volatility destabilises the entire portfolio and you sell at the worst possible moment.

Why is the time horizon so long?

The space industry is structurally different from classic sectors like pharmaceuticals or consumer goods. Development cycles are extremely long — from signing a government contract to the first commercial spaceflight, years can pass. Rocket Lab grew for over a decade before building a stable customer base and an order book that provides visibility for the next 12 months. Satellite broadband companies need to launch an entire constellation of hundreds or thousands of satellites before they start generating revenue.

This has a direct impact on valuations. The market discounts distant cash flows, and when interest rates rise, distant cash flows are drastically devalued. That is precisely why space stocks collapsed in 2022–2023 — not because rockets stopped working, but because money became more expensive and investors stopped being willing to pay premium valuations for distant profitability.

In my view, the key point is this: the space industry is a story that will likely fulfil its potential, but its timing is unpredictable. Investors who entered in 2021 on the wave of hype waited years to break even. Those who enter today with a ten-year horizon and a level head have a realistic chance. The key word: level.

Risks that prospectuses won't tell you loudly

The first risk — sector concentration. The space industry is small. If Rocket Lab runs into financing problems or loses a key contract, a fund like UFO will feel it far more than a broad-market index would feel the loss of one small company. Large players like L3Harris dampen this concentration but also dilute the pure space exposure.

The second risk — geopolitics and government dependence. Space remains heavily intertwined with government contracts and the defense industry. A change in administration, NASA budget cuts, sanctions on Chinese technology or geopolitical tensions in satellite communications directly affect company order books. This sector is not immune to election results — quite the contrary.

The third risk — technological failure. Rockets explode. Satellites fail in orbit. In a sector where one failed test can mean losing billions and suffering reputational damage, black swans are far more likely than in banking or pharmaceuticals. Rocket Lab has had failed launches — each one knocked the share price down in the short term.

The fourth risk — liquidity in smaller companies. Redwire or AST SpaceMobile have daily trading volumes in the range of tens of millions of dollars. For a retail investor with a position of 50,000 CZK this may not be a problem, but be aware that the bid-ask spread can be significant. More on what spread is and what it actually costs you in the article on spread.

How to build space industry exposure into a portfolio

The space industry is not for everyone. If you are just starting out in investing, first go through the guide to building your first portfolio — the core is a global index like VWCE or CSPX, not sector bets on future technology. This is not investment advice, and for the vast majority of investors a broad-market ETF remains a better and calmer choice.

If you still want to add the space sector as a satellite, think along a spectrum from defensive to aggressive. L3Harris gives you space with the safety cushion of a diversified defense business and stable dividend income. Rocket Lab gives you a pure story — and pure risk. ARKX or UFO then provide a mix without the need to pick individual companies, but at the cost of a higher TER and higher volatility.

The closing question is simple: do you believe that the private space industry will transform the infrastructure of global communication, security and exploration by 2040? If yes and you have a ten-year horizon, satellite exposure in the portfolio makes sense. If you are unsure, you probably need nothing more than letting space function as part of the global index, which will absorb it gradually at its natural weight.