ARK’s new Space Exploration & Innovation ETF (NYSEARCA: ARKX) opened up for retail investors on Tuesday 30th March and many people would be surprised by the stocks on show. Included in its holdings are some very ‘non-traditional’ space’ stocks, such as e-commerce leader Alibaba, agricultural giant Trimble and the top streaming service, Netflix. Confusing though this is, there is a method to its madness.
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Whilst it does include companies such as Boeing, Virgin Galactic, and Lockheed Martin, the ETF made a point of adding companies that will not just help with the exciting industry of space exploration, but also those that will use technology developed for space to improve life on Earth. AI tech and agriculture will be instrumental for exploring beyond our little blue planet. But, the likes of streaming services and e-commerce companies could receive a huge boost in the future as digital technologies will directly benefit from this burgeoning industry.
Furthermore, it would be insanity to expect an ETF with only traditional space stocks to do well. The space industry is extremely volatile and the inclusion of the following 3 stocks will both help ameliorate volatility and encourage innovation in non-traditional space technologies.
Trimble Inc (NASDAQ: TRMB) is an industrial technology solutions company based in California. The company makes many things that are essential for space development and exploration such as GPS, Global Navigation Satellite System technology, and laser and optical technology software, which guide and track many different things such as machines, parts, and people.
At a glance, this company has offices in more than 40 countries worldwide and its overall revenue for fiscal year (FY) 2019 came in at $3.27 billion. Its major industries include Geospatial, Transportation, and Telecommunications; as well as Agriculture, Government, and Forestry. This is a company with many areas of expertise that will greatly contribute as well as benefit to understanding space and its many mysteries.
Trimble’s share price currently sits at around $77 and Ark’s Space Exploration & Innovation ETF holds over 70,700 shares. The weight percentage of Trimble within the ETF is just under 8.5% and it currently holds the top spot.
The 3D Printing ETF
The 3D Printing ETF (BATS: PRNT) is another ETF controlled by… you guessed it, ARK! And whilst this might seem a bit counterproductive, it does make sense as one focus of this ETF is on companies that are involved with computer-aided design (“CAD”) and 3D printing simulation software, as well as 3D printing hardware, scanning, and measurement.
The expansive 3D printing industry includes developing new space exploration applications. Indeed, one theory is that future rockets might include 3D printing hardware to build engine parts and more on exploration journeys. The future is likely to see 3D printing bring down production and cost for man industries, of which space is included.
The valuation for this ETF is not too high, sitting at around $3.8 billion at the time of writing, whilst its stock goes for roughly $38 apiece. This ETF currently makes up 6% of the ARKX holdings, making it the second-largest holding for the Space Exploration & Innovation ETF.
Kratos Defense & Security Solutions Inc.
Kratos Defense & Security Solutions Inc (NASDAQ: KTOS) is a company that literally does what its name suggests; defense and weapons development. Along with the range of services that a defense and security solutions company can provide, satellite imaging and aircraft tracking is normally included. However, Kratos has recently developed an RF Passive Ranging service that can identify and accurately locate spacecraft in geosynchronous orbit (GEO). This product will greatly enhance space domain awareness as we send more and more people into space.
Ark’s Space Exploration ETF currently holds 134,895 shares in the company and it currently makes up 5.93% of the ETF’s holdings. Kratos also has a market value of $3.7 billion. Its share price saw a spike, peaking at $29 on Tuesday, the day that ARKX started trading. Investors are expecting the Kratos stock to benefit over the next few months as the Space Exploration and Innovation ETF takes off.
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