Space is having a moment.
SpaceX filed its initial public offering (IPO) papers with the SEC earlier this month and is targeting a valuation in excess of $1 trillion (!) when it comes public later this year.
On Tuesday, Amazon acquired Globalstar (GSAT) for $11.57 billion in an effort to beef up its satellite business and challenge SpaceX’s (and Elon Musk’s) Starlink, with the goal of launching 3,200 satellites into low-Earth orbit by 2029 – vastly expanding from the 200 satellites Amazon currently operates. For comparison, Starlink already has about 10,000 satellites in orbit, providing satellite internet to more than 10 million users globally.
Meanwhile, the Artemis II just circumnavigated the moon, taking the astronauts aboard “where no man has ever gone before.” Also, Project Hail Mary – the space-based film starring Ryan Gosling – is a big hit at the box office, raking in half a billion dollars worldwide in just a matter of weeks.
So space is in vogue right now. And it’s spilling over to space stocks.
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The Procure Space ETF (UFO is the clever ticker symbol) is up 35% year to date and 143% in the past year. GSAT is its fourth-largest holding, and it was one of its top performers even prior to this week’s Amazon deal, soaring 273% in the last year. SpaceX will no doubt be part of UFO’s portfolio once it comes public, perhaps as early as June. But I would be wary of buying the hype on the SpaceX IPO.
For starters, investing in any IPO right off the bat comes with a great deal of risk, as there is little known about a company’s sales and earnings growth before it hits the market. And the higher-profile the IPO, the greater risk it carries upon its market debut, as the pre-IPO hype drives the IPO price to unreasonable levels, resulting in a stock that’s instantly way overvalued the second it becomes available for public trading.
The result? Much-hyped IPOs often struggle for their first few months, usually well past the lockup expiration date four months after the IPO date, when company insiders are free to sell their shares. Even Meta (ne Facebook) succumbed to this overhyping when it came public in 2012, instantly retreating from its sky-high IPO price and failing to top it until a year after its market debut.
With SpaceX aiming for a $1.75 trillion valuation before anyone even gets a look under the hood at its financials, chances are it will suffer some early growing pains as well. It doesn’t mean that SpaceX won’t eventually be a great stock in the same way META/FB became one following its first-year malaise. But I wouldn’t touch the SpaceX IPO with an 11-foot pole.
That said, space stocks are benefiting from the SpaceX hype. But as the one-year returns in the UFO and GSAT demonstrate, their tremendous performance well predates SpaceX’s IPO filing. Wall Street has been infatuated with space for a couple years now. It’s very possible that when SpaceX does come public, it will signal a top for space stocks, as my colleague Brad Simmerman suggested on the latest episode of our Street Check podcast.But for now, space stocks are thriving like few subsectors outside of energy are in an otherwise choppy, sideways market.
3 Space Stocks to Buy Instead of SpaceX
Given their recent performance, it’s very possible space stocks will crash and burn in a few months. But if you’re investing either for the very short term (i.e., the next couple months before the SpaceX IPO) or the long term (i.e., years), several space stocks may have staying power.
Here are three that stand out to me:
AST SpaceMobile (ASTS)
Market cap: $35 billion
One-year return: 300%
AST SpaceMobile aspires to be like Starlink, but with a twist: The company is building a low-Earth orbit satellite-based internet service that’s designed specifically for smartphones around the world. It’s still early in its development – the company launched its first satellite in September 2024, and just started generating revenue last year – but its ambitious goals are getting closer to becoming a reality, as the company has inked deals with more than 50 telecommunications companies, including AT&T, Verizon, Vodafone of the U.K. and Canada’s Orange, and plans to launch more than 40 satellites this year. And Wall Street is eating the story up, with the stock up 300% in the last year and from 2 per share two years ago to 91 per share as of this writing.
Can it go higher? It already was – touching as high as 122 in January. The stock is undoubtedly volatile but tends to surge on new satellite launches, new deals with big telecom companies, and on earnings. As long as space remains in favor, it should easily eclipse that January high – probably before year’s end.
Rocket Lab Corp. (RKLB)
Market Cap: $42 billion
One-year return: 284%
Rocket Lab does basically what it says: provide launch services for rockets in the U.S., Canada, Japan and elsewhere. It also provides other space systems solutions, including spacecraft design, manufacturing, components, constellation management solutions, flight and ground software, etc. It makes small- and medium-sized rockets and something called the Electron, an orbital small-launch vehicle for large constellation deployments, interplanetary missions and – eventually – human spacecraft missions. The last part is especially relevant in the wake of the successful Artemis II mission, as governments around the world attempt to deploy human beings further and further into space. Revenues have more than doubled the last two years (from $245 million in 2023 to $602 million last year), and are expected to double again to $1.2 billion by next year. The company is not yet profitable, but accelerating revenues are always a good sign of growth. Like ASTS, RKLB is currently trading (73) well below its January peak (96). I like the upside.
Planet Labs (PL)
Market cap: $11.3 billion
One-year return: 944%
The one-year return for this mid-cap stock is jaw-dropping, and makes this stock a bit more precarious than the other two. But this satellite maker is growing steadily, with revenues improving by double digits every year this decade, and should continue to do so for the foreseeable future, with revenues estimated to grow by 38% in its current Fiscal 2027 and by another 32% next year. PL shares are much closer to all-time highs than the other two, having just topped 36 for the first time a week ago before pulling back below 33 this week. You might want to wait for a bigger dip before taking a flyer on this one. But the steady year-over-year revenue growth (and narrowing losses) make for a good foundation.
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