Space ETFs: Investors could see a '$1.7 trillion space economy by 2040,' expert says

ProcureAM Founder and CEO Andrew Chanin joins Yahoo Finance Live to talk about space launch ETFs and how it could be a new investing opportunity over the next two decades.

Video Transcript

DAVE BRIGGS: Astronauts from around the world are en route to the International Space Station following a Wednesday launch from the Kennedy Space Center in Florida. The crew 5 mission is the sixth flight for the joint endeavor between Elon Musk's SpaceX and NASA. The mission commander, by the way, in this flight, Nicole Mann, she is the first ever Native American to travel to space.

But what about the space investment space? Andrew Chanin is the ProcureAM founder and CEO here as part of our ETF report brought to you by Invesco QQQ. Good to see you, Andrew. We do want to talk about the ETF space. But what significant progress has SpaceX made?

ANDREW CHANIN: So what we're seeing is roughly a launch every week, which is something that is quite unheard of. And the pace at which they're sending these satellites up is something that is both an opportunity, as well as a concern that needs to be managed as far as space debris goes in the future. But what they're doing is really pushing the space industry forward significantly. And it's creating many opportunities for numerous companies throughout the industry.

SEANA SMITH: Andrew, speaking of the many opportunities for companies within the industry, what does this do, though, to investor excitement? When you're trying to get investors excited about investing in space, is something like this type of launch, does that help push that forward?

ANDREW CHANIN: You know, I think we saw two launches yesterday, and expecting a third today. One of it is extremely interesting because Elon Musk is essentially sending a Russian cosmonaut to the ISS, the first time that this has happened from US soil in decades. So with all of the tensions that we see geopolitically, seeing that space is still able to drive forward despite ongoing hostilities, this is something that shows how cooperative the industry is.

But when they're sending up these satellites, you have to think about satellite manufacturers and operators, parts manufacturers for what goes into these. At the same time, because they're sending up so many satellites, it's drying up the supply of launches from what SpaceX can provide, while creating opportunities for other launch companies, many of which happened to be in the UFO ETFs that are now going to see other clients potentially stepping forward for launch needs, which is something where this rising tide seems to be lifting a lot of ships here.

DAVE BRIGGS: Indeed it is. Nice analogy there. You have three reasons to invest in the space economy. What are they, Andrew?

ANDREW CHANIN: It's constantly changing. But one thing that we notice again with the Russian-Ukranian conflict going on right now is how important space is from a military standpoint. And from the early days of the invasion, satellites were actually providing us with the imagery showing the Russian troop buildup on the border.

And as we've seen different issues with one of the satellites being held hostage and rocket parts not being sent from Russia due to sanctions, there creates all this need for non-Russian companies and Allied countries to create these types of solutions that are needed for the space industry. And because space is so key for militaries, we're seeing a tremendous amount of spending coming from militaries and governments around the world.

So the percentage of what is being spent from space coming from governments is slowly starting to increase, which is certainly encouraging, but there's also technological changes, like reusable rockets that are significantly lowering the cost of entry to space. So we're at a technological turning point, which is extremely exciting.

But also, so many other technologies that we utilize space, so transformative technologies like 5G, the internet of things and connected devices. Even cryptocurrency and cloud computing are starting to rely on space. So if you're looking at any of these industries and you're looking for companies that are literally operating as the digital data toll keepers for this digital data superhighway, space companies become extremely critical for that.

SEANA SMITH: Andrew, speaking about all the money that's being spent within this industry, what do you think is the growth trajectory for this sector here, looking out over the next 5 to 10 years?

ANDREW CHANIN: So we're not allowed to make projections, but we can look at various research houses that do put out numbers. And Morgan Stanley believes that we're looking at potentially a $1.7 trillion space economy by 2040. Bank of America, Merrill Lynch has come out saying north of $2 trillion by 2045.

So there are varying estimates, but one of the large reasons that people believe that this industry will continue to grow, it comes from the communications side, so broadband, internet connectivity. Elon Musk is sending up basically double the amount of satellites that were in orbit as of two years ago, just in the last year or so. So we're seeing new industries emerge, other industries really starting to heat up, and this is something that hopefully could be a benefit for the broader industry as a whole.

SEANA SMITH: All right, Andrew Chanin, always great to have you. Thanks so much.