From Europe to Space: Three Small-Cap Stocks That Could Benefit from the Space Boom

Investor interest in the space industry surged following SpaceX's IPO. On June 12, Elon Musk’s company went public on Nasdaq and raised $75 billion, with a valuation of approximately $1.77 trillion. The offering was the largest in stock market history.

The buzz surrounding SpaceX’s IPO has sparked a wave of interest in the entire space sector. The VanEck Space Innovators ETF surged by about 97% in the first few months of 2026, although by the end of June, its year-to-date gain had slowed to 30%.

The rally has also led to a revaluation of many publicly traded companies in the space sector. A significant number of them remain unprofitable, but investors are willing to pay a substantial premium for their shares in anticipation of further growth in the space economy.

Investor interest in the space industry is driven not only by the hype surrounding SpaceX, but also by long-term trends: the sector is growing rapidly and structurally. The declining cost of launching cargo into orbit, the miniaturization of satellites, and the development of low-Earth orbit constellations are shaping a market that, according to industry estimates, could reach $769 billion by 2030.

In Europe, government programs are providing additional stimulus for the industry’s growth. The European Space Agency has launched the €900 million European Launcher Challenge, which is providing funding to five private rocket companies at once. One of the program’s key conditions is that payloads must be placed into orbit no later than 2027.

At the same time, European countries are increasing their spending on defense and space technology. Germany, in particular, plans to increase its defense budget to approximately €152 billion by 2029—three times more than in 2023. Space-related projects are becoming a separate priority, with plans to allocate about €35 billion to them by 2030.

At the same time, the most promising European space startups remain privately owned. Among them are Isar Aerospace, PLD Space, and Rocket Factory Augsburg. On June 15, 2026, Isar Aerospace conducted its second launch of the Spectrum rocket from a spaceport in Norway, aiming to place a payload into orbit from mainland Europe for the first time. STMicroelectronics, a publicly traded manufacturer of satellite chips, is notable for being a key supplier to Starlink; however, with a market capitalization of over $60 billion, the company does not qualify for our selection.

Nevertheless, there are a number of small publicly traded companies in the European market that stand to benefit from the growth of the space economy. Below are three ideas that deserve investors’ attention:

Avio is one of the most direct investments in the development of the European space industry. The company serves as the prime contractor for the Vega C launch vehicle and participates in the Ariane 6 program. In fact, Avio is one of the key elements of Europe’s strategy to ensure independent access to space.

In the first quarter of 2026, the company’s revenue increased by 19% year-over-year to €128.5 million (approximately $150.8 million), while EBITDA rose by nearly 30% to €5.2 million (about $6.1 million). As of June 26, 2026, Avio’s market capitalization stood at about $1.3 billion.

The expansion of the Vega program and new contracts with the European Space Agency could be the main drivers of growth in the coming quarters, given the limited number of independent launch facilities in Europe. This is precisely the premise underlying the positive outlook of Jefferies analysts, who reaffirmed their “buy” rating in June 2026.

Another advantage of Avio is its industrial base and many years of experience in the industry: the company has been in operation since 1912 and is currently involved in the development of the next generation of Vega rockets.

The main risk is the high valuation of the company. The P/E ratio is around 89, which is several times higher than the average for the broader European market, where the STOXX Europe 600 index stands at about 19. This suggests that Avio’s growth prospects are already factored into its stock price. Furthermore, the space industry remains a technically complex business, where a failed launch or program delay can significantly impact financial results and investor sentiment.

According to Market Screener, the company's stock has four "buy" recommendations from analysts and one "hold" recommendation. The average price target is €43.7, implying a 53% increase.

OHB is Europe's largest publicly traded satellite manufacturer. The company produces satellites for navigation, communications, and Earth observation, working primarily with government customers.

In the first quarter of 2026, total operating performance—which OHB uses as a key indicator of activity on long-term projects— rose 15% year-over-year to €279 million. The order backlog reached a record €3.4 billion—a 45% increase from a year earlier. Meanwhile, new orders were approximately 1.6 times higher than quarterly revenue, indicating that demand remains strong. However, according to a number of analysts, the current results do not yet reflect the expected increase in European defense spending.

Another benefit for investors is the change in the capital structure. Prior to the June offering, only 5.7% of the shares were in free float, but after the transaction, the free float is expected to increase to approximately 19.2%. This will increase liquidity and may attract more institutional investors. However, a risk remains: even after the offering, the free-float share will remain small. Against the backdrop of a more than 450% rise in the stock price over the past year, the stock may still experience significant volatility due to capital inflows or outflows, including from thematic funds.

In May, NuWays analyst Simon Keller raised his price target for the stock to €320 from €272, maintaining a “buy” rating and expecting earnings per share to grow by an average of 39% per year through 2030 (the report is available from Oninvest).

GomSpace is the smallest—and at the same time the riskiest—company in this selection. The Danish manufacturer develops nano- and microsatellites, as well as key subsystems for them, including power supply, communications, orientation, and on-board control systems. In addition, the company designs satellite platforms for government, defense, and commercial customers.

In the first quarter of 2026, revenue rose 43% year-over-year to 127 million Swedish kronor (approximately $13.2 million), and adjusted EBITDA rose 22% to 13.8 million Swedish kronor. New orders for the quarter doubled, bringing the order backlog to approximately 390 million Swedish kronor (about $40.5 million). For 2026, GomSpace forecasts revenue in the range of 540–650 million Swedish kronor (approximately $56–68 million) with an EBITDA margin of 5–12%. However, the company expects negative free cash flow as it is actively investing in expanding its production capacity, hoping to capitalize on the growth of the European space market.

Additional potential stems from an agreement with the Ukrainian company Stetman to create a national satellite communications system similar to Starlink, a project that could be partially funded by the European Union.

However, the risks are commensurate with the scale of the business. The company is currently teetering on the edge of profitability, and a significant portion of its working capital consists of past-due accounts receivable: one undisclosed customer owes GomSpace approximately 150 million Swedish kronor (about $15.6 million). Despite the collateral received and management’s confidence that the funds will be repaid, Redeye analysts do not expect this money to be received in the near term.

This is not a personalized investment recommendation.