These 2 Space Stocks Skyrocketed 388% and 174% in 2025: Here's 1 Reason I Wouldn't Buy in 2026.

In a decade or two, people might be able to take vacations on the moon, companies could mine its resources, and shuttles might travel to Mars and beyond. The allure of space stocks is that these things are no longer in the realm of science fiction. That excitement, combined with a desire to invest in businesses that could lay claim to parts of space, drove Rocket Lab (NASDAQ: RKLB) and Planet Labs (NYSE: PL) to soar in 2025, though both have dipped in the past month.

PL data by YCharts.

The record-breaking initial public offering (IPO) of Space Exploration Technologies (NASDAQ: SPCX), or SpaceX, added fuel to what was already a space-investing frenzy. That extreme speculation is the main reason I won't buy Rocket Lab or Planet Labs in 2026. It is worth having them on your radar, but as I'll explore in this article, there's too much froth in this high-risk sector right now, and their sky-high valuations are based on relatively low revenues. Given that the Federal Reserve may raise interest rates this year, which could reduce risk appetite, I want to see whether some speculative money falls away and companies deliver more concrete results before I invest.

Image source: Getty Images.

Rocket Lab

Rocket Lab provides space launches and builds satellites and space equipment for government and commercial use. It is due to launch Neutron, its own reusable rocket, by the end of this year, though the blast off has already been delayed several times. It also recently acquired Iridium Communications (NASDAQ: IRDM), which not only extends its satellite network and launch capabilities but also helps it become a full end-to-end space company capable of designing, manufacturing, and launching satellites.

Rocket Lab has yet to turn a profit, which is not uncommon in space stocks. However, with a market cap of almost $50 billion and a trailing-12-month revenue of about $660 million, its price-to-sales ratio (P/S ratio), which measures revenues against market cap, is about 75. That is extremely high, which means investors are paying a lot for shares in a company that isn't yet generating significant revenue.

P/S ratios can be an important part of the puzzle when valuing stocks, especially ones that aren't profitable. However, they aren't the be-all and end-all, especially when investors look at past revenues rather than what's in the pipeline, and Rocket Lab could have a lot of good news on the way. It has a backlog of $2.2 billion as well as promising partnerships with NASA and other international space agencies, and the Iridium acquisition will also help increase revenues. Even so, 75 is out of this world.

Planet Labs

Planet Labs is a leader in satellite imaging, providing an ever-changing stream of data to both businesses and governments. When combined with artificial intelligence (AI) analytics, its services have applications in defense, agriculture, climate monitoring, and more. It also has a solid backlog of $816 million and partnerships with the National Geospatial-Intelligence Agency, the U.S. Navy, and several governments.

Its subscription model is starting to generate sustainable revenue streams, and its last quarterly revenue was up 42% year over year to $94 million. However, satellites are expensive, and the company isn't profitable -- it lost $247 million last year after losing $123 million the year before. Its P/S ratio is 27, which is much better than Rocket Lab's but still extremely high. For context, Nvidia's (NASDAQ: NVDA) is 20.

Space stocks are too hot right now

My first beat when I started writing about investing was cryptocurrency, and I see parallels between today's space industry and the digital asset frenzy of 2020 and 2021. A lot of people invested out of fear of missing out (FOMO) on a financial revolution and weren't prepared for it to take decades rather than months or years. That isn't to say that there isn't huge potential in the space sector, just that FOMO is driving prices right now. Plus, space innovation is a costly business, and a lot can go wrong.

I like Rocket Lab and have it on my watch list, but I can't ignore that high P/S ratio nor the fact that the SpaceX IPO stirred up a lot of speculative investment that may fall away at the first sign of trouble. I am OK with waiting until next year to see how things shake out, especially as a hawkish Fed may also weigh in on share prices. Sure, I might miss out on any immediate growth, but pausing for six months isn't such a big deal when the real returns could be decades away.

Emma Newbery has positions in Nvidia. The Motley Fool has positions in and recommends Nvidia, Planet Labs PBC, and Rocket Lab. The Motley Fool has a disclosure policy.