"The Trump-Musk Deal" Ignites the Aerospace Sector of US Stocks, Related Concept Stocks Soar this Week

In the past week, aerospace stocks in the US stock market have risen, with gains reaching double digits. Part of the reason is the so-called "Trump/Elon trade" mentioned by industry analysts, which is recognition of the relationship between President-elect Trump and SpaceX CEO Elon Musk. Just this week, Rocket Lab (RKLB.US) rose by 41%, Intuitive Machines (LUNR.US) rose by 28%, Spire Global (SPIR.US) rose by 26%, Planet Labs (PL.US) rose by 16%, Redwire (RDW.US) rose by 15%, and AST SpaceMobile (ASTS.US) rose by 10%. CEO of ProcureAM Andrew Chanin said, "I think no one can underestimate the potential catalysts, which many people haven't talked about before: the most important person in the history of the space industry has garnered attention from the elected president, who has found space to be very important during his previous term, so much so that he created a separate military branch." The company operates the Procure Space ETF (UFO.US) trading on the aerospace sector in the US stock market. The rise in aerospace stocks in the US market to some extent has been driven by third-quarter performance and individual updates, such as Rocket Lab's progress on the Neutron project and Spire's sale of its maritime business to eliminate debt. Cantor Fitzgerald analyst Andres Sheppard said that broader market sentiment is also driving the rise in these stocks. Sheppard has given a "buy" rating to Rocket Lab, Redwire, and Intuitive Machines. Sheppard said in an interview, "I think there will definitely be a sense of adventure in this industry after Trump's victory." From the perspective of the year to date, the best performing aerospace stocks this week have bounced back from the slump of the post-SPAC era and are expected to triple or even quadruple by 2024. Sheppard said, "Aerospace stocks have been one of the best-performing sectors in the market this year. We see a significant increase in investors entering this sector. We have received calls and emails from institutional investors who are finally realizing that this market will only continue to accelerate. It will only continue to expand because of national security, because of the Artemis program that will bring American astronauts back to the moon, because of Elon's ambitious Mars goal." Sheppard emphasized that Musk's SpaceX company is privately held, which means investors are turning to other companies to have exposure to the space field. Similarly, Chanin believes that SpaceX's dominant position in rocket launches and satellite broadband is actually helping companies with spacecraft to enter orbit, "they all benefit from lower costs of access to space." It is worth noting that there have also been divergences in aerospace stocks this week. The stock prices of new companies that have gone public in recent years have risen, while traditional companies such as EchoStar (SATS.US) and Viasat (VSAT.US) have seen their stock prices fall by more than 10% this week. CEO of Cestrian Capital Research Alex King said that this discrepancy represents a shift in the "gatekeepers" between generations of space companies. King said, "Demand for these traditional businesses is declining. I think what you see in space is a slower evolution in the tech sector, while tech development is very fast, and ultimately, low cost is always the winner. I think the market will decide which companies will survive and which won't." Despite the huge profits of top space companies so far this year, Sheppard believes the industry will not slow down anytime soon. Sheppard said, "Overall sentiment has been very optimistic and will continue to be optimistic, despite the outstanding performance." This is in line with the views of the CEO of Rocket Lab, who said during the company's third-quarter earnings call this week that he expects the incoming Trump administration to be "very focused on space" and will continue the industry's momentum.