In the era of rapid innovation, space tourism stocks have emerged as one of the most promising sectors this year. Historically, the government primarily funded space exploration, but the end of the 1970 Space Race opened the doors to the private sector. Today, private companies are actively involved in developing rockets and shuttles to aid in space exploration. Some have even commercialized human spaceflight, aka space tourism.
The space industry, while still small, is growing rapidly. According to a report by Morgan Stanley, the space sector, currently valued at $350 billion, will grow to $1 trillion by 2040. But while the outlook remains optimistic, short-term turbulence for space stocks is still very much in the cards. The novelty of the space industry, coupled with developments based on trial and error, heightens the risk factor. However, investors willing to keep their stocks long-term can benefit from fruitful gains.
On that note, here’s a look at three space stocks poised for impressive long-term gains.
Virgin Galactic (SPCE)
Virgin Galactic (NYSE:SPCE), founded by Richard Branson, is making major strides in space tourism. The company aims to commercialize human spaceflight by piloting passenger flights outside Earth’s orbit. Virgin completed its 12th suborbital spaceflight in June and is developing its new Delta spacecraft line. Each flight carries six passengers on two astronauts and costs $450,000 a ticket.
Virgin Galactic has faced turbulence since its public debut in 2019, but signs point to greater growth in the long haul. The company reported $2 million in revenue in its previous quarter financials, driven by commercial flights and membership fees. This was a significant incline from $0.4 million in the prior year. Although the company remains unprofitable, it managed to lower losses versus the prior quarter.
Virgin Galactic is in its growth phase, but its strong revenue numbers indicate plenty of upside. The company also holds a first-mover advantage in the space tourism industry, making it one of the top space tourism stocks worth betting on for long-term returns.
Rocket Lab (RKLB)
Space X leads the rocket race, but Rocket Lab (NASDAQ:RKLB) is not far behind. The company that considers itself a “one-stop shop” for all things space-related is involved in developing space crafts and rocket launches.
Despite playing second fiddle in the rocket industry, Rocket Lab shows plenty of long-term potential. Last month, the company completed its 50th launch of the Electron, reaching this milestone at an unprecedented pace. Rocket Lab plans to increase the frequency of its launches, which will undoubtedly lead to higher revenue.
The company’s growth potential is evident in its financials. In Q1, it reported a 69% increase year-over-year (YoY) to $92.8 million. Gross profits rose to $24.2 million from $6.4 million a year ago, while net losses narrowed by 3%. Regarding guidance, Rocket Lab anticipates an increase in revenue in the $105 to $110 million range.
High revenue growth rates and a diversified offering give investors plenty of reasons to be optimistic about RKLB stock. The company is also nearing profitability and hopes to hit its targets in the next two years. Investors willing to bet on the long-term prospects of space tourism stocks will find RKLB a good buy.
AST SpaceMobile (ASTS)
AST SpaceMobile (NASDAQ:ASTS) isn’t one of your typical space tourism stocks, but the company plans to disrupt the telecommunications industry with a space-based satellite. AST aims to enable direct-to-cell calls with a space-based broadband satellite network.
As it stands, satellite-based calls can only be made through specialized phones, but AST’s space satellites will enable the average cell phone to send and receive calls. While this is a challenging feat, the company’s ability to make this a reality will be an absolute game-changer in improving digital connectivity.
Hence, it is unsurprising that investors are bullish on AST’s growth potential. The company is set to launch five Bluebird satellites in August to connect non-covered spots in space with terrestrial cellular operators such as Verizon and AT&T. By 2025, it plans to launch as many as six satellites a month. AST also has lucrative deals with telecommunication companies.
AST’s space satellite technology shows promise but is still in the test phase; ASTS stock is risky. However, investors willing to weather the turbulence have the potential to earn outsized returns in the long haul.
On the date of publication, Divya Premkumar did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.