"The Trump-Musk Deal" ignites the U.S. stock market aerospace sector, with related concept stocks soaring this week

According to Zhitong Finance, in the past week, U.S. aerospace stocks rose, with increases reaching double digits, partly due to what industry analysts are calling the "Trump/Elon trade," which recognizes the relationship between incoming President Trump and SpaceX CEO Elon Musk. This week, Rocket Lab (RKLB.US) rose 41%, Intuitive Machines (LUNR.US) rose 28%, Spire Global (SPIR.US) rose 26%, Planet Labs (PL.US) rose 16%, Redwire (RDW.US) rose 15%, and AST SpaceMobile (ASTS.US) rose 10%.

Andrew Chanin, CEO of ProcureAM, stated, "I think no one can underestimate the potential catalysts, many of which I believe have not been discussed before: the most important person in the history of the space industry has received the attention of the elected president, who found space so important during his previous term that he created a separate military branch." The company operates the aerospace exchange-traded fund Procure Space ETF (UFO.US).

The rise in U.S. aerospace stocks has been driven to some extent by third-quarter earnings and individual updates, such as Rocket Lab's progress on the Neutron project and Spire's sale of its maritime business to eliminate debt.

Andres Sheppard, an analyst at Cantor Fitzgerald, stated that broader market sentiment has also driven these stocks higher. Sheppard gave "buy" ratings to Rocket Lab, Redwire, and Intuitive Machines. In an interview, Sheppard said, "I think there will definitely be a risk-on sentiment in the industry after Trump wins."

From a year-to-date perspective, the best-performing aerospace stocks this week have shaken off the post-SPAC era malaise, with growth expected to triple or even quadruple in 2024.

Sheppard said, "Aerospace stocks are one of the best-performing sectors in the market this year. We are seeing a significant increase in investors entering the sector. We have received calls and emails from institutional investors who are finally starting to realize that this market will only continue to accelerate. It will only continue to spread due to national security, the Artemis program bringing American astronauts back to the moon, and Elon’s ambitious Mars goals."

Sheppard emphasized that Musk's SpaceX is privately held, which means investors are turning to other companies to gain exposure to the space sector. Similarly, Chanin believes that SpaceX's dominance in rocket launches and satellite broadband actually helps companies with spacecraft get into orbit, "They all benefit from the lower costs of entering space." It is worth noting that this week, aerospace stocks also showed divergence. The stock prices of newly listed companies in recent years have risen, while the stock prices of established "traditional" companies like EchoStar (SATS.US) and Viasat (VSAT.US) have declined, with both dropping more than 10% this week.

Alex King, CEO of Cestrian Capital Research, stated that this gap represents a change in the "gatekeepers" between generations of space companies. King said, "Demand for these traditional businesses is declining. What you see in space is a slower evolution in the tech sector, while the development in the tech field is very rapid, and low cost is always the ultimate winner. I believe the market will decide which companies will survive and which will not."

Despite the significant earnings of top space companies so far this year, Sheppard believes the industry will not slow down anytime soon. Sheppard stated, "Overall sentiment has been very optimistic and will continue to be optimistic, despite the strong performance."

This aligns with the views of the CEO of Rocket Lab, who stated 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 maintain the momentum of the industry's development