NextFin News - The Neuberger Berman Next Generation Space Economy Fund is shifting its capital toward European aerospace firms, seeking shelter from the valuation froth currently engulfing U.S. space stocks. Michael Barr, the fund’s senior portfolio manager, confirmed that the $325 million vehicle is increasing its exposure to the Continent as the "SpaceX effect" drives domestic multiples to levels he considers unsustainable. The move highlights a growing divergence in the global space sector, where American retail enthusiasm for Elon Musk’s private ventures is spilling over into public markets, often untethered from fundamental earnings.
Barr, who has managed the fund since its inception in late 2025, has historically maintained a growth-oriented but valuation-sensitive stance. His recent pivot suggests a tactical retreat from the "hype cycle" that has seen U.S. peers like Rocket Lab and AST SpaceMobile surge by triple digits over the past year. According to Bloomberg, Barr is now targeting European incumbents and specialized suppliers that trade at a significant discount to their American counterparts, despite holding critical roles in the global launch and satellite supply chains.
The valuation gap is stark. While U.S. space companies often trade on multiples of projected revenue years into the future, European stalwarts like Indra Sistemas SA and Thales SA offer exposure to the same secular tailwinds—increased defense spending and satellite miniaturization—at more traditional industrial valuations. Barr’s strategy rests on the belief that the European space ecosystem is undervalued because it lacks the high-profile, charismatic leadership that defines the U.S. sector. However, this view is not a universal consensus; some analysts argue that the U.S. premium is justified by a more aggressive innovation culture and a deeper pool of venture capital that feeds the public pipeline.
The "SpaceX hype" mentioned by Barr refers to the halo effect created by the private company’s dominant market share and its potential future IPO. This anticipation has acted as a rising tide for all U.S. space boats, but it also introduces significant concentration risk. If SpaceX were to delay its public debut or face a technical setback, the collateral damage to public U.S. space stocks could be severe. By moving into Europe, Neuberger Berman is effectively buying an insurance policy against a U.S. sentiment reversal while maintaining a stake in the industry’s long-term expansion.
Risks to this European pivot remain. The European space industry is heavily reliant on government contracts and the European Space Agency (ESA), which can be subject to political gridlock and slower procurement cycles than the U.S. Department of Defense. Furthermore, the lack of a dominant, low-cost heavy-lift launcher in Europe—comparable to SpaceX’s Falcon 9—remains a structural bottleneck for the region’s satellite operators. Barr’s bet assumes that the valuation floor provided by European defense budgets will outweigh these operational laggards in a period of market volatility.
Explore more exclusive insights at nextfin.ai.
