Advisors see stars in SpaceX IPO after successful Artemis splashdown: Westwood CIO

The success of NASA’s Artemis II mission has thrust the space industry into the spotlight, spelling opportunities for advisors and their clients, according to Adrian Helfert, chief investment officer of multi-asset strategies at Westwood Holdings Group.

The mission, which ended earlier this month when the Orion capsule carrying three American astronauts and one Canadian splashed down in the Pacific Ocean, was a resounding success.

Clearly, the success of Artemis II is a positive for aerospace and defense names such as Lockheed Martin Corp. (Ticker: LMT) which is the prime contractor for Orion, and Northrop Grumman Corp. (Ticker: NOC), which produces key components for the vehicle. “The defense primes are an easy way to start getting involved for investors in this,” Helfert, told InvestmentNews, but noted that the broader space industry is also basking in the mission’s afterglow.

“This wasn't just a symbolic milestone, it was a technical proof in concept,” he said. “And the de-risk, in my mind, a platform for space investment that is going to unlock a multi-decade investment cycle.”

The asset manager, whose father was a NASA chief scientist, grew up in the space industry, and now closely monitors the sector for investment opportunities.

“The winners and the ones that we're looking at when we talk about stocks and opportunities are those that are locking in multi-year government and commercial contracts,” he added.

Space spells dollars. McKinsey projects that the so-called space economy will be worth $1.8 trillion by 2035, up from $630 billion in 2023. This includes both “backbone” applications such as those for satellites, launchers, and services such as broadcast TV and GPS, according to McKinsey, as well as “reach applications.” To illustrate the latter, in a 2024 report, McKinsey used the example of Uber, whose business relies on a combination of satellite signals and chips inside smartphones to connect drivers and rider and guide them to their destination.

“As an advisor, you need to capture where you see, a high compounding economic growth rate to capture good compounding wealth,” said Helfert. “And space is a key way for advisors to do that.”

He also urged advisors to pay close attention to private companies in this space. The “massive milestone” of the looming SpaceX mega-IPO is going to force people to look for other large private space companies, such as Sierra Space.

“Sierra Space is an extraordinary company to me that is effectively building Fedex for orbit - they've got a Dream Chaser vehicle that is flying regularly,” he said. The company Helfert, added, has just renegotiated its contract with NASA for Dream Chaser, which flies resupply missions to the International Space Station and is “heavily entrenched” with the Department of Defense.

“They haven't formally filed for an IPO, but that is in plan for them,” Helfert explained. “This is the kind of company that investors will be looking for to be exposed to.”

The asset manager, who is also the portfolio manager of the Enhanced Income Opportunity ETF (Ticker: YLDW), also looked ahead to SpaceX’s public debut, which could come in June, according to reports.

“We talk about the Artemis splashdown,” he said. “Wait till the splashdown of SpaceX in the public markets.”

“It does multiple things - it shifts around investment in the indices, it's large enough to be a significant constituent of the index,” he added. “So investors are going to start looking at their portfolio … when they evaluate, they're looking at space exposure.”

Investors that want exposure to commercial space station modules could look at privately-held Axiom Space, according to Helfert, while also flagging SpaceX rival Blue Origin. “There are a number of companies that are out there,” he said. “The splashdown of SpaceX in the public markets is going to be just like the successful Artemis mission.”