Space stocks say mayday

The latest space race kicked off with a bang—literally.

Yesterday, a New Glenn rocket being tested by Blue Origin, Jeff Bezos’s space startup, exploded into a fiery red ball during a pre-launch engine test in Cape Canaveral, Florida. Nobody was injured, but the incident was a huge blow to Blue Origin in its race against Elon Musk’s SpaceX.

The blast reverberated through the entire space exploration industry:

• AST SpaceMobile, which is using Blue Origin to put satellites in space, had its worst day in over two years, sinking 14.79%
• Amazon, which also relies on Blue Origin to deploy satellites, fell 1.23% today
• Rocket Lab, a launch and satellite systems company, plunged 3.07%
• Lunar exploration company Intuitive Machines sank 4.09%
• Satellite firm Planet Labs fell 0.51%

For AST and Amazon, their businesses could be materially affected by today’s misfire due to the damage to infrastructure or prolonged delays to the launch schedule. Both companies are rushing to get satellites into orbit: Amazon is trying to provide broadband internet service anywhere on Earth, while AST SpaceMobile has a similarly lofty goal for cell service.

The bearish news hit particularly hard across the nascent industry because of the massive rally space stocks have been enjoying in the leadup to the SpaceX IPO. Whether today’s selloff is an overreaction depends on how quickly Blue Origin can get launches back up and running.

“It’s too early to know the root cause but we’re already working to find it,” explained Jeff Bezos in a post on X. “Very rough day, but we’ll rebuild whatever needs rebuilding and get back to flying.”

SpaceX is lowering its price tag

While Blue Origin’s setback should theoretically be a boost for SpaceX, Elon Musk’s darling also had a hiccup today.

Bloomberg reported this morning that SpaceX is now targeting a valuation of $1.8 trillion, down from the previous $2 trillion it set its sights on back in April. Despite the reduction, SpaceX is still expected to go public at the highest valuation in history.

The news added more pessimism about the broader space industry as a whole. After all, it doesn’t bode well for smaller players that have seen their stocks rally if SpaceX, the clear leader of the new space race, isn’t worth as much as investors expected.

To make matters worse, Musk took to X to add details about SpaceX’s multibillion-dollar deal with Anthropic—details that weren’t in the company’s IPO prospectus—further confusing investors trying to gauge whether the company’s monster valuation will hold up.

Only time will tell if valuations end up coming back down to Earth.—LB