""It's trading at more than 100 times earnings," he said of the space ETF on the episode titled Space, Freedom, and Physics Envy. That is the kind of valuation that prices in years of growth and flawless execution across a basket of companies, many of which are still pre-profit or thinly profitable."
""When I think about a company like SpaceX, it's very exciting what they have done with launching rockets and bringing down the cost of getting satellites up into space. It's really marvelous. But the cash flows, I have a hard time imagining those hitting right away.""
""As you get out past year 8, 10, 12, even if we're talking about large sums of money, they're less relevant today for investors," he said. A dollar of asteroid-mining revenue in 2040 is worth a small fraction of a dollar today once a reasonable discount rate is applied."
The Procure Space ETF has achieved over 120% returns in the past year, significantly outperforming the S&P 500. However, it trades at a forward P/E multiple exceeding 100, indicating high expectations for growth. The ETF also has a 0.75% expense ratio, which is considerably higher than typical S&P 500 index funds. Concerns arise regarding the sustainability of cash flows from companies like SpaceX, as future revenues from space ventures may not materialize quickly or significantly impact current valuations.
Read at 24/7 Wall St.
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