With over 400 imaging satellites orbiting our globe, a bird’s eye view of Earth has never been cheaper. Analysts have taken advantage of this access and, with advanced machine learning, derived many ways to use satellite imagery for more than just the gorgeous view. While benefits from the geo-intelligence movement have been reaching a wide variety of industries, it is the financial sector where satellite imagery analytics can have the largest impact. Check out four ways investors are using satellite imagery to understand markets and assist in the ongoing quest to beat the street.
4. Predicting global commodity supply
Did you know that the volume of oil in a storage tank can be estimated by the shadow it casts on the side of it’s container? And, if you are able to measure the shadow in every tank on the globe, you can accurately predict the world’s supply of oil. While this method of projection was impossible just a few years ago, improvements in satellite technology and analytics tactics have made efforts in this area feasible. While political turmoil and extraction technology developments have caused great uncertainty in the oil markets, satellite data analytics can help keep investors updated with accurate, frequent reports. And the power of these analytics doesn’t stop with oil; satellites can track the build-up of stockpiles on a mine site, the progress of a forestry operation, or the growth of crops on farmland across the globe. The insights gained through this kind of observation have the power to alter the way investors assess opportunities.
3. Measuring economic fluctuations
While one satellite image on its own may give its viewer a glimpse at valuable insight, the real benefit of earth observation comes from watching the world change at a macro level. In finance, this benefit goes from interesting to game-changing. Economies, typically measured annually by a census and other methods of self-reporting, are difficult to project. But what if you could watch these same economies grow and shrink in real time? Satellites give us this opportunity. Tracking the progress of infrastructure projects in central China, the increase in nighttime activity in Ghana, or the change in number of ships in and out of ports in Brazil — these are just a few of the activities which can give insight into the economic state of a region or country. This information can help investors understand the geopolitical landscape of areas in which they are considering investment.
2. Projecting revenue at Big Box retailers
While counting cars in parking lots is not a new concept, the extent of such an operation for more than a single retail location was beyond the scope of feasibility just a few years ago. Information that once required thousands of labour hours to acquire can now be derived from a single dataset of satellite imagery. With advances in machine learning technology, and the availability of 30 cm resolution imagery, cars can now be detected by satellites 400 km above them. With this identification comes the ability to track and model the parking lot traffic of massive retailers like Walmart and JC Penney. Fluctuations in this traffic appear to correlate accurately with store revenue. Investors with access to this kind of information can make more guided decisions in their strategy for the upcoming quarter and beyond.
1. Tracking the progress of invested assets and their competitors
You can’t lie to satellites. This is a key advantage of utilizing satellite imagery when tracking the progress of an asset or creating a competitor analysis. After an investor has sunk valuable capital into an investment, continuous monitoring is required to assess when an exit is the optimal strategy. Typically, this kind of analysis relies upon self-reporting from the asset itself. And while many regulations have been adopted in order to keep self-reporting companies honest, sometimes things fall through the cracks. Investors can be much more confident if they track their assets themselves. For example, using satellite imagery to watch the progress of a real estate development can give investors information that would otherwise be uncertain. The same method of analysis can be done for the competitors of an invested company. This proprietary information would be nearly impossible to procure by traditional investigative methods. However, satellite images give a bird’s eye view of every square mile on earth (yes, that includes North Korea — check out our previous blog post if you want to learn more about that). Observing a foreign wheat farmer’s harvest, or tracking the production of cars at a European auto manufacturing plant, is fair game. Satellite imagery is changing the rules of investing.
Satellites have been observing our world for over five decades. In that time, they have gone from producing grainy images of a faraway earth to the augmented colour, high resolution imagery available today. This imagery, as well as advancements in machine learning and artificial intelligence, is continually improving our understanding of the changing planet. Investors are just beginning to grasp the true value of this imagery and the impact it makes on the world of finance.