Transcript generated automatically by AI and may contain errors.
Chapter 1: What is the main topic discussed in this episode?
Welcome to Fearing Greed Q&A, where we ask and answer questions about business, investing, economics, politics, and more. I'm Sean Aylmer.
Chapter 2: What recent events have sparked interest in space investment?
Over the weekend, SpaceX listed on Wall Street. In honor of that, we're revisiting this interview from March, which took a look at the investment opportunities in space. Now, we are not an investment podcast. If you want to invest in space opportunities or anything else, go and see a financial advisor who can tailor advice to your needs.
But I spoke to Cameron Gleeson, Senior Investment Strategist at BetaShares about investing in space. Cameron, welcome to Fear and Greed Q&A. Welcome to Fear and Greed Q&A, where we ask and answer questions about business, investing, economics, politics, and more. I'm Sean Aylmer.
Chapter 3: What factors are driving the growth of the space economy?
Investors, it seems, are getting excited about space. The Artemis II mission, the planned IPO of SpaceX, even the Hollywood movie project Hail Mary have helped put space firmly on the radar. So what exactly does that look like and where are the opportunities? Remember, this is general information only.
You should always seek advice tailored to your circumstances before making investment decisions. Cameron Gleeson is a Senior Investment Strategist at BetaShares. Cameron, welcome to Fear and Greed Q&A.
Sean, thanks very much for having me here. I haven't seen Project Hail Mary yet. I'm looking forward to it. But you're right. That's probably one of the triggers, isn't it?
You know, I went and saw Project Hail Mary, Cameron, and was totally disappointed. And everyone's attacking me. They say it's one of the great movies. And I just, I missed it. Anyway, park that. What's behind the surge in interest in space at the moment?
I think you've highlighted some of the keys there. The momentum and the interest in SpaceX potentially IPOing on the NASDAQ has been a strong driver of interest.
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Chapter 4: Which companies are leading the new space economy?
But more generally, we're starting to see an ecosystem of companies involved in the space industry, which are making very significant progress. Many of them are growing their revenue at extraordinary rates. Some are even reaching profitability, which is good to see because this is still quite an emerging industry.
We're starting to see that trading volumes in a lot of these companies have really gone up. So a lot of these are global companies rather than Australian companies. But if you sort of look at the amount traded, that's a clear indication that investors are seeing an investment case for investing in space.
And I'm sure we can get into it, but there's been some, I think, real progress in terms of key technologies, which are enabling the commercialization of space.
Okay. So let's, I mean, I know Betashees is planning to launch a space ETF. So obviously you guys have done a lot of work on it. What are the sorts of assets that you're talking about?
Yeah, that's right. So we're looking to launch BetaShares Space Industry ETF. The ticker code for that will be RCKT, rocket, would be the pronunciation of that. That's on the launch pad. We're doing our final checks. Nice. So we're looking to launch that. Countdown. The key technologies that we've sort of seen really evolve are twofold.
One is firstly the real sort of, I guess, growth in what we call low Earth orbit satellites. These are satellites that orbit around the Earth anywhere between 160 kilometers and 2,000 kilometers above the Earth. They fly around the Earth in around about 90 minutes. Because they're quite close to Earth, they have low latency in terms of their signal reaching the Earth.
If you're looking to have connectivity with a satellite, it's really good to be close to the Earth's surface. The problem being is that when you're close to the Earth's surface, your field of vision or the amount of the Earth's surface that you can cover is quite small.
And so what we saw was that Starlink, which is one of Elon Musk's ventures within SpaceX, really revolutionized this by creating what we call a constellation of satellites. And this has allowed other companies to sort of follow down that path. And the provision of services like broadband internet from space have become a reality.
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Chapter 5: What role do low Earth orbit satellites play in the space industry?
And so use cases, whether they be in rural areas or in disasters, or indeed, there's been some really interesting stories where Starlink was basically switched on over Ukraine after the Russians were able to do a cyber attack and take out Ukraine's communication network.
it's really sort of provided a vital backup for areas where, you know, we don't necessarily have good coverage for the internet. And just, you know, 30% of the world's population don't actually have access to internet. So services like Starlink that provide, you know, broadband internet coverage are going to be critical moving forward.
Okay. So that's one type of asset. And I kind of understand that one. I'm with you so far, Cameron. I'm afraid that to ask the next question, what other asset types might, you know, can investors think about?
Yeah, so these applications where you're able to earn revenue from outside the space industry are critical. Another company which is really fascinating is AST Space Global, which is forming strategic relationships with large telecommunication networks to provide cellular coverage in areas where we don't necessarily have good coverage. And that's a slightly different technology.
to the one that Starlink's progressed down, but that's a really interesting development for that company. Beyond that, geospatial mapping.
So if we look at a company called PlanetLab, they are essentially mapping the world in near real time, overlaying AI and providing insights, whether that be to governments, to insurance companies after a disaster, to agriculture, and that company's reached profitability. So these are real applications.
But what's really enabled this and what's enabled these industries to grow has been the reduction in the cost of rockets and shipping satellites, for example, into space. And that's really the game changer here. We can think of rockets really as just the freight industry or the trucking industry.
Don't dull down one of the sexiest industries ever. Come on.
Yeah, well, you've got to draw a historical parallel somewhere, don't you? You do. So, you know, it used to cost like $12,000 per kilogram to ship freight into space back when that was dominated by government, government agencies, defense contractors. But if we look at SpaceX, they've lowered the cost to around about $2,000 to $4,000 a kilogram with their Falcon rockets.
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Chapter 6: How is Starlink revolutionizing internet access from space?
With that sort of breakthrough. And there's other names that are leading the way in that front. Rocket Lab is another. They had 21 successful launches last year. They are also involved in terms of government contracts, building a satellite network for missile detection.
So there's a number of these sort of emerging rocket companies that are lowering the barriers for others to build on the application layer above that.
What's the step change here? Is it because it went from public to private sector? Is it SpaceX, almost specifically SpaceX? Is it something else, a technology, AI? Why the paradigm shift?
Well, I think, I mean, whatever you think of Elon Musk, he's clearly a maverick. And he challenged in the automotive space with Tesla. And he sort of had a very specific vision, which is obviously that the humans should be an interplanetary species. And a step in that vision is really commercializing and bring down the economics of spaceflight.
And, you know, while his long-term goal may be to get to Mars, the next, you know, version of, you know, his rocket platform, which is the Starship rockets, be able to carry between 100 to 150 tons of material into space.
It's really about sort of building on that sort of technology and know-how and doing it in a way which is sort of different to the way, you know, a government would approach these things. We often talk about Silicon Valley being, you know, move fast, break things. We don't want to, you know, break too many things in space, but...
Perhaps there is an element of risk-taking where commercial operators were prepared to push boundaries that a government which, you know, couldn't necessarily afford to have a disaster like. I remember growing up as a kid, the Challenger disaster. You know, these sorts of things, you know, set the government space program back for years.
And what that's also done is it's enabled the government to sort of look to play catch up with Artemis II, the US government looking to go back to the moon. So in a way, really, he has been a maverick, a pioneer, but he's enabled others to follow that vision, follow that dream. And, you know, you tend to get a bit of cross-pollination, individuals moving from one organization to another.
So building up that institutional knowledge as to how to do this and do this effectively.
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Chapter 7: What are the emerging technologies enabling space commercialization?
Are there any companies here involved in it?
Yeah, there are a couple of companies here in Australia who do rocket launch. So they're relatively small companies by comparison to some of the US companies. India is a player. We've got companies that are involved in building out alternative technologies. internet connectivity from Europe. But China is also going to be and is indeed a major player.
There's a lot of Chinese companies that build a lot of the componentry. They're also looking to launch their own network or constellation of low Earth orbit satellites. Currently, there's about 14,000 low Earth orbit satellites. About 10,000 of them are currently Starlink, but others are growing. And they're adopting different ways of doing things.
Is there a way you can build that constellation of satellites where you don't necessarily need as many, but potentially the technology or the approach is a little bit different? So it is a space race to a degree, and that's going on on a governmental level.
We know that China is going to try and potentially challenge the US to get to the moon, but also on a commercial level in terms of building out a lot of this technology, the connectivity and the like.
And this will only take off, pardon the pun, over the next decade or so, Cameron?
Well, as I sort of said before, some of these companies are already reaching profitability. I mentioned Planet Labs. The expectations for other companies like, for example, Rocket Lab. are that they're going to reach profitability in the next two years. There is a heavy upfront investment required to sort of build out.
This is a CapEx intensive industry, which is why a lot of these companies have come to the public markets. But given that they're extremely high growth, the opportunity is there. That opportunity is there and we're already seeing commercial contracts But I think, you know, we don't want to just focus on what's sort of the here and now.
We know that with that reduction in the cost of shooting stuff into space, we then sort of see these next order potential, you know, areas of building out that economy. And it might sound crazy, but in 2050, you know, could there be the ability to use the resources which are on the moon?
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Chapter 8: How are global players, including China and Australia, involved in the space race?
is far easier. And the moon could, in fact, form a staging point for exploration out into deep space, including Mars. So that presents a really interesting opportunity. We know that operating outside the Earth's atmosphere presents a lot of challenges, but the degree of advances we've seen in AI and automation and robotics and humanoids and the like,
do really open up a lot of opportunities, which we just couldn't even have envisaged even 10 years ago. And we're probably not going to be able to think of all of them here today. But with that lowering cost of firstly, that first stage of getting into space, that's the first catalyst. And beyond there, the sky, or should I say the stars at the limit.
Fantastic. Cameron, thank you for talking to Fear and Green. Thank you, Sean. That was Cameron Gleeson, Senior Investment Strategist at BetaShares. Remember, this is general information only. You should always seek advice tailored to your circumstances before making investment decisions. I'm Sean Aylmer, and this is Fearing Greed Q&A.