How SpaceX could revolutionize the space industry

Yahoo Finance's Brian Sozzi, Alexis Christoforous, and Ines Ferre speak with ProcureAM CEO Andrew Chanin about what the SpaceX launch means for the future of corporate space travel, and the impact for the broader space economy.

Video transcript

BRIAN SOZZI: All right, let's stay on all things space here. Andrew Chanin-- he's the CEO of ProcureAM. He's joining us now. Andrew, big week-- big weekend for the space program, but what does it mean for corporate space travel?

ANDREW CHANIN: I'm glad you asked that, because what happened over the weekend wasn't necessarily a scientific breakthrough. But what we've realized is that NASA and other space agencies are more and more ever willing to say, OK, we don't need to build everything ourselves. We're willing to work with the commercial space industry to help us achieve our goals.

And that's what we saw this weekend. It's something that should actually bring a lot of confidence to the space investing community, where if they're actually able to create products that can help NASA, the ESA, Roscosmos and beyond achieve their goals, they're happy to work with them.

ALEXIS CHRISTOFOROUS: Now I know at your company, you recently launched what you're calling the first pure play global space ETF. Can you give us an idea of how many companies are part of that ETF? Which companies are they? And how did you come to the decision to start this ETF?

ANDREW CHANIN: Well, space was always an industry that I was excited about, but one that had been historically difficult for investors to get exposure to. And yeah, some of those reasons were because there aren't many publicly-traded space companies. And really, many people have a differing definition from person to person as far as what space is and what a space company does.

But what we've noticed is that when you have a long-term theme like space, where you have many different diversified players from around the world, an ETF is a really interesting rafter for investors to use in order to get exposure to this type of theme. So someone investing in UFO gets currently almost 30 publicly-traded companies from around the world specializing in all different areas of the space economy, and that's from rocket manufacturing and launching, the satellite manufacturing and operation, to companies that are reliant upon space-based systems and services. So think things like GPS, Dish Network, satellite radio, things like that.

But what we've realized is there are so many companies. And an ETF, especially one like UFO that's passively managed, isn't just a set it and forget it type of thing, where the companies that are in that fund are there always and forever. There's an index that the fund seeks to track that's constantly updating every quarter. It rebalances every-- semi-annually. It reconstitutes. And it's a way for investors to actually get exposure to new companies that go public if they meet the passive rules for the index.

INES FERRE: Andrew, Ines Ferre here. You mentioned satellite manufacturing. You also mentioned GPS. These are areas which investors are very involved in when it comes to space.

But looking ahead over the next 10 to 20 years even, what are some of the other investment opportunities in space that investors would get jazzed up about?

ANDREW CHANIN: So right now, one of the big drivers is broadband internet. So you look at things like 5G, cloud computing, connected devices, even blockchain now, some of these areas that people are really interested in getting exposure to-- and satellites are actually providing this link for all of these technologies, because they're all super heavy data industries. And helping data get from A to B, or helping generate new data is actually-- satellite companies are these global, digital, super-highway toll operators for outer space. And so that makes it a really interesting play.

But looking further down the line, you see things like Space Force, and things like the space order that was just written by the President of the United States. And what we're noticing is that space is this new frontier, not just for governments anymore, but for businesses. And so things that are already starting to perk up that we haven't seen before is the defense and militarization of space. And that's one of these areas where the US has already said how we're planning to move forward.

But just because the US does it doesn't mean it's happening in a vacuum. So essentially, the US says we need to build up our space defense and military positioning. You better believe that China, Russia, India, Europe, and beyond are also thinking how they're going to try to build out their infrastructure in outer space.

So these are things that are already starting to happen today. And I would only imagine that as more companies try to ramp up these efforts, just like any other domain for military and defense, that space is this next big area for building up that infrastructure.

BRIAN SOZZI: Andrew, you mentioned Space Force. We haven't heard much about Space Force since the president put it into play and put into action. What does the 10-year outlook look like? Do you think it's more incremental spending, or we get some form of space spending boom by the government?

ANDREW CHANIN: So we already have started seeing spending. We've already seen some contracts being written up. Some of these are with existing defense companies that they've already had contracts with for air and land and other frontiers for outer space. So far, they've been kind of nonviolent purchases, more like satellite jamming types of technologies, ones that actually won't go up and explode satellites, and all of sudden, you have huge debris fields, which could become another area for growth, as we have to clean up all of the debris that we have in orbit.

But I would imagine more companies actually creating things to actually protect and harden satellite infrastructure, where if you have a satellite that could get co-opted, it's almost like the cybersecurity side as well of satellites. Because in the early days of satellites, satellites pretty much went up, and they had one ability to do something. It kind of focused on one thing.

Now they can be reprogrammable from Earth. They can do so many different functions. And that can actually create many more vulnerabilities.

So I would imagine that the technology for satellites is going to increase significantly, as well as the ability to repair them. So satellites having the capabilities to actually self-repair if there have been certain damages to them, or take themselves out of commission if there are certain aspects where they become damaged and aren't able to be repaired. So I would imagine the hardening of satellites.

But certainly, I'd love to see more manned space exploration and things like that, more things where we're actually looking outwards, as opposed to sending things upwards and looking back towards Earth.

INES FERRE: And Andrew, the mission this weekend was so important, and such a success for SpaceX. But what about companies like Boeing, which also has a contract to do essentially the same thing? And it has its Starliner, and had a setback back in December of last year. What do you see for a company like Boeing and human spaceflight?

ANDREW CHANIN: Yeah, so Boeing actually happens to be one of the holdings in our fund. But because they're such a diversified company, not just focusing on outer space businesses, they're kind of-- they fall into this diversified tranche. That said, Boeing is having its own issues, not just in outer space, but also for regular aviation.

And so I think for them, it actually is an important area for them to possibly expand on, because it is this diversifying piece, where some of the brand has been harmed a bit over the past year with their airlining problems. So I think this is an area that Boeing sees. They've already collaborated with other companies as well, such as Lockheed, to build the United Launch Alliance.

So it's something that they have many different ideas of how to move forward. A lot of their technologies can actually be used in outer space as well. So I think it's an area that they might start to look further on, maybe not necessarily to bring civilians into outer space, but certainly hoping for some of these larger government contracts, because Boeing is a company that the government has worked with for many, many years. And I think it might be a little bit easier for some of these older, more established companies to get some of these government contracts than a brand new start-up, saying, hey, we've got an idea of how to do this.

That said, I think what we saw today from SpaceX is going to encourage many more entrepreneurs to come to the fray and say, hey, you know what? I've got a great idea. And I actually think I know how to do it. If I could raise the capital to do so, I might be able to secure a contract with a government agency, or maybe other companies trying to send things into space.

But I think what was really important is what we're seeing is from a successful launch, like we did yesterday, actually sending humans to the I-- or this past week, sending humans to the ISS is actually helping us lower costs of actually getting things in outer space, which is what SpaceX is doing such a tremendous job on. So if they can keep on lowering those expenses to send things into outer space, there's so many more technologies that actually the barriers of entry and the costs of R&D will drop significantly. And doing so can really revolutionize the space industry.

BRIAN SOZZI: All right, well said. Andrew Chanin, CEO of ProcureAM, appreciate the insights.

ANDREW CHANIN: Thanks for having me.