The continuing downward trend in share prices for Rocket Lab, Planet Labs, and AST SpaceMobile.
In 2025, the space stocks of Rocket Lab, Planet Labs, and AST SpaceMobile have taken a hit, despite some promising news. The shares of these space tech giants saw a significant rise in 2024, but the momentum appears to be waning in 2025. Rocket Lab, for instance, secured a new defense contract with Kratos Defense, and Stifel upped its price target for Rocket Lab stock, but the share price still dwindled by 6.4%.
The main reason behind this decline could be referred to as "gravitational pull" in the stock market. The meteoric rise in these space stocks in 2024 could have pushed their values a bit too high, causing investors to sell off their shares and lock in their gains instead of buying more at what they perceive as overvalued prices.
Another factor playing a role in this downward trend is the interest rate environment. In 2024, the Fed only reduced interest rates by 100 basis points, which is less than anticipated, making it more expensive for unprofitable companies to borrow money. Low interest rates, on the other hand, can help stabilize unprofitable stocks, making high- or even static-interest rates a challenge for some space tech companies.
Investors are currently expecting the Fed to cut rates by as little as 50 basis points this year and only twice, which may not provide the full support these space stocks need to regain their momentum.
Considering this backdrop, it's hard to advocate for these space stocks as momentum plays in 2025. As they're not currently profitable, investors have to value them as value stocks, which can be a challenge given their lack of a traditional P/E ratio.
Additional Insights:
- The space tech industry is subject to market volatility, which can impact stock prices despite a company's strong performance.
- Companies in the space tech industry also face operational and financial challenges such as declining earnings and rising raw material costs.
- Order delays, overvaluation, and specific company issues like regulatory changes and technological advancements can affect various space stocks, influencing their market value.
Despite securing new contracts and positive analyst predictions, the finance of Rocket Lab and other space tech giants like Planet Labs and AST SpaceMobile is facing challenges in 2025. The gravity of overvalued stock prices is causing investors to sell their shares, as they believe money is better spent elsewhere. The interest rate environment, with anticipated minimal cuts, is making it more expensive for these companies to invest in their operations. Literally, the Fed's decision to cut rates by only 50 basis points twice this year might be insufficient to revive the momentum of these '2025' space stocks.
