Space – the final frontier

Mark Hawtin , Head of Global Equities team

Capital at risk. This should not be construed as investment advice.

This article is featured in the Q3 2025 Future Strategist newsletter, you can read the rest of the newsletter here.

With so much investor bandwidth being devoted to the development of AI on Earth, we thought it would be good to look further afield at more futuristic themes and Space in particular. 

The rapidly evolving opportunity in Space economics was given a huge boost by the October 2024 ‘chopsticks’ moment when M was successfully recovered on landing. This created a step change in rocket transport economics with the ability to reuse significant parts of the infrastructure. In the third quarter of 2025, the stock market fielded the IPO of Firefly, one of the commercial launch companies that competes in this fast-growing market to commercialise the Space economy. 

Source: Mechazilla Chopsticks lift Starship Super Heavy Booster 7. (Credit: Elon Musk / SpaceX via Twitter.)

Source: June 2021, Morgan Stanley Research, Haver Analytics. Past performance does not predict future returns.    

As the chart above shows, the Space economy is expected to grow to over $1 trillion by 2040, with some research suggesting this milestone will be reached far earlier. Within the overall economy, the rocket launch market could take as much as a 10% share or $100 billion of revenue opportunity. 

This is the primary way to access the investment opportunity in today’s public markets, with Firefly and Rocket Labs as the two leading quoted contenders, in our view. The market overall is divided into three primary segments defined by payload capacity. At the highest end of the market in heavy payloads, SpaceX dominates with its Falcon 9 rocket.

Space Launch Ecosystem

Source: August 2025, Company Data/Filings, Morgan Stanley Research.

SpaceX is expected to have about 175 to 180 launches in 2025 but 80-85% of the payloads will go to internal projects, Starlink in particular. Blue Origin’s New Glenn only plans 8 to10 launches so is significantly smaller than SpaceX, with most capacity going to commercial partners. 

The medium and small payload market is where other quoted players – Firefly and Rocket Labs – operate. Both companies have had varying degrees of success with their launches and both have aggressive launch ramps for 2025. SpaceX is seen as the world’s most expensive private company today with a market value estimated at $400 billion while Firefly and Rocket Labs are much smaller with quoted market values of $5 billion and $25 billion, respectively. 

Investing in the Space economy is not for the faint-hearted. Individual launch successes or failures can impact share prices dramatically (see the 20%+ fall in Firefly’s share price following a recent rocket failure on the testing launchpad). But we believe there is a tremendous long-term growth opportunity in Space and one that will inevitably capture the imagination of investors as the launch schedules ramp up and as we see more technology defined moments like that of the SpaceX chopsticks rocket capture. 

While government-backed agencies in the US and China still command a significant portion of Space spending, commercial companies are coming to the forefront as preferred partners. At the same time, the possible winners are extending beyond the oligarch-backed companies like SpaceX and Blue Origin and this provides an off ramp for companies like Northrop Grumman, Lockheed and NASA to outsource launch activity to more commercial sources. In fact, Northrop is a direct shareholder in Firefly as part of its diversification strategy. 

It may be too early to invest in the Space economy via the quoted markets but the opportunities are beginning to emerge in what will clearly be a huge market. In the words of Captain James T. Kirk of the Starship Enterprise, “You know the greatest danger facing us is ourselves, an irrational fear of the unknown. But there’s no such thing as the unknown — only things temporarily hidden, temporarily not understood.” The journey to understanding Space, while light years long, is well underway!

• Social media has become a powerful market force, disconnecting prices from fundamentals.
• Meme rallies often persist, distorting benchmarks and testing traditional valuation models.
• Combining fundamental conviction with technical discipline helps active managers manage risk, and stay adaptable in volatile markets.

When social media drives a company's stock to levels few imagined, it puts the very idea of fundamental valuation to the test. In 2021, GameStop's stock rose more than 1,000% in a few days. The business had not changed. Social media and mobile trading apps gave retail investors the means to unleash a frenzy of buying. That surge lasted weeks – long enough to distort benchmarks and overwhelm professional investors. In 2024, a single post from "Roaring Kitty" on Reddit sent GameStop and AMC surging again, forcing multiple trading halts. Social media-driven stock buying is now a force that can significantly impact a fundamental investor's performance, particularly without a process in place to manage it. As Keynes warned, the market can remain irrational longer than investors can remain solvent. In the age of social media, those words have never been more valid.

How meme trading works

Social media has shortened the distance between a story and a trade. A post on Reddit or TikTok can reach millions within minutes, and mobile apps make it effortless to act. The sequence is familiar. Attention rises, sentiment turns, and retail money pours in. Options activity and short covering can magnify the surge, pushing prices well beyond their starting point.

What makes today different is that sophisticated investors no longer shy away from bubbles. Many now trade momentum directly, using it to lift returns rather than waiting for prices to fall back. Their buying extends rallies and raises the cost of hesitation. Those who wait for fundamentals to reassert themselves often watch from the sidelines as prices continue to rise.

The valuation problem

Investors are used to thinking about value as future cash flows. That still matters, but it is no longer the only driver. Social media and narrative now play a bigger role.

GameStop's 1,000% rise in 2021 was a notable example, but it was not an isolated case. The same stock surged again in 2024 after a single online post, and in 2025 names like Opendoor, Tesla, and Nvidia all experienced rapid spikes fuelled by attention as much as earnings. These episodes are becoming increasingly common as social platforms amplify stories and trading apps facilitate instant participation. A 2021 study in Economics Letters found that "meme periods show persistent price and volume effects tied to social media buzz." Rallies can last well beyond the initial spike, often keeping valuations above what fundamentals support.

This persistence has knock-on effects. When heavily traded meme names sit inside indices, their inflated prices pull benchmarks higher, leaving investors who avoid them at risk of lagging performance.

Fundamental and technical analysis work best together

Price is the market's final arbiter. It condenses information, fear, and expectation into a single number. For investors, that makes technicals indispensable. They are often misunderstood as a way to predict the future. In reality, they measure the present. Trends, momentum, and participation show how the market is voting right now. This discipline matters. Even the best research can be undone by bias. It is easy to dismiss a stock as too expensive according to valuation models, yet the market continues to buy it. Technicals highlight when momentum is building and when the market may know something you do not. They signal that conviction alone is not enough, and that ignoring price can mean missing powerful runs.

Once you see technicals in that light, the value of combining them with fundamentals becomes clear. Fundamentals show what a business is worth. Technicals confirm whether the market agrees. One without the other is incomplete.

The edge comes from blending the two. Fundamentals anchor conviction. Technicals guide timing and discipline. Together they create a process that cuts losers early, lets winners run, and builds portfolios that endure even when markets behave irrationally.

What this means for active managers

Over time, prices and fundamentals tend to align – i.e., the stock price returns to reflect the fundamental view. For active managers who focus solely on fundamentals, meme stocks create a difficult test. 

Performance can be severely damaged by waiting for prices to revert, only to see valuations stay inflated for weeks, months or years.

There are opportunities. Rallies create liquidity to trim positions or sell into strength. By applying technical discipline to their fundamental convictions, managers can manage exposure while remaining alert to the pull of market narratives. A clear process also allows them to explain decisions to boards and clients in language that reflects both valuation and business performance.

Discipline over prediction

Meme stocks are not a fad. They reflect lasting changes in how information spreads and how investors behave. Prices can rise or stay inflated for reasons that have little to do with earnings.

The answer is not prediction but process. Fundamentals provide conviction. Technicals provide discipline. Attention and sentiment must be tracked in conjunction with earnings.

Markets will always test patience. Social media makes those tests sharper and faster. Investors who succeed will be those who follow a repeatable process that measures, manages, and adapts whenever momentum takes hold.

KEY RISKS

Past performance does not predict future returns. You may get back less than you originally invested.

We recommend this fund is held long term (minimum period of 5 years). We recommend that you hold this fund as part of a diversified portfolio of investments.

The Funds managed by the Global Equities team:

• May hold overseas investments that may carry a higher currency risk. They are valued by reference to their local currency which may move up or down when compared to the currency of a Fund.
• May encounter liquidity constraints from time to time. The spread between the price you buy and sell shares will reflect the less liquid nature of the underlying holdings.
• May invest in smaller companies and may invest a small proportion (less than 10%) of the Fund in unlisted securities. There may be liquidity constraints in these securities from time to time, i.e. in certain circumstances, the fund may not be able to sell a position for full value or at all in the short term. This may affect performance and could cause the fund to defer or suspend redemptions of its shares.
• May have a concentrated portfolio, i.e. hold a limited number of investments or have significant sector or factor exposures. If one of these investments or sectors / factors fall in value this can have a greater impact on the Fund's value than if it held a larger number of investments across a more diversified portfolio.
• May invest in emerging markets which carries a higher risk than investment in more developed countries. This may result in higher volatility and larger drops in the value of a fund over the short term.
• Certain countries have a higher risk of the imposition of financial and economic sanctions on them which may have a significant economic impact on any company operating, or based, in these countries and their ability to trade as normal. Any such sanctions may cause the value of the investments in the fund to fall significantly and may result in liquidity issues which could prevent the fund from meeting redemptions.
• May invest in companies predominantly in a single country which maybe subject to greater political, social and economic risks which could result in greater volatility than investments in more broadly diversified funds.
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• May, under certain circumstances, invest in derivatives, but it is not intended that their use will materially affect volatility. Derivatives are used to protect against currencies, credit and interest rate moves or for investment purposes. There is a risk that losses could be made on derivative positions or that the counterparties could fail to complete on transactions. The use of derivatives may create leverage or gearing resulting in potentially greater volatility or fluctuations in the net asset value of the Fund. A relatively small movement in the value of a derivative's underlying investment may have a larger impact, positive or negative, on the value of a fund than if the underlying investment was held instead. The use of derivative instruments that may result in higher cash levels. Cash may be deposited with several credit counterparties (e.g. international banks) or in short-dated bonds. A credit risk arises should one or more of these counterparties be unable to return the deposited cash.

The risks detailed above are reflective of the full range of Funds managed by the Global Equities team and not all of the risks listed are applicable to each individual Fund. For the risks associated with an individual Fund, please refer to its Key Investor Information Document (KIID)/PRIIP KID.

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DISCLAIMER

This material is issued by Liontrust Investment Partners LLP (2 Savoy Court, London WC2R 0EZ), authorised and regulated in the UK by the Financial Conduct Authority (FRN 518552) to undertake regulated investment business.

It should not be construed as advice for investment in any product or security mentioned, an offer to buy or sell units/shares of Funds mentioned, or a solicitation to purchase securities in any company or investment product. Examples of stocks are provided for general information only to demonstrate our investment philosophy. The investment being promoted is for units in a fund, not directly in the underlying assets.

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