Planet Labs, Rocket Lab, and AST SpaceMobile All Jumped After the SpaceX IPO Announcement

SpaceX is a private company run by Elon Musk, the often controversial CEO of Tesla (NASDAQ: TSLA). SpaceX is one of the largest space companies in the world, regularly launching satellites and spacecraft into orbit. The fact that SpaceX is planning to hold an initial public offering (IPO) is a very big deal. However, Wall Street often gets overly excited about events like this.

SpaceX wants to raise a lot of money

SpaceX hopes to raise up to $75 billion in its IPO. That would give the company a starting valuation of around $1.75 billion according to some news outlets. Investors have long sought ways to own a piece of SpaceX even though it isn't yet public, noting that it is the top holding of Baron Partners Fund (BPTRX). Baron Partners Fund was an early investor in Tesla, as well, which is also one of the fund's largest holdings.

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Given that SpaceX hasn't even publicly discussed its IPO with potential investors, it is hard to tell how successful it will be. Market conditions could also change, making it harder or easier to raise the desired capital. However, one thing is very clear: Wall Street is highly anticipating the IPO. The emotional impact of this news is something you should keep in mind before buying SpaceX stock.

Other space stocks are already feeling the afterglow

The problem of investor sentiment goes beyond SpaceX, as Wall Street has taken the excitement from the SpaceX IPO news as a reason to buy other space stocks, including Planet Labs (NYSE: PL), Rocket Lab (NASDAQ: RKLB), and AST SpaceMobile (NASDAQ: ASTS). Year to date, Plant Labs has seen its stock rise by a huge 75% as of this writing.

Before you jump on board, too, step back and consider what has changed with companies like Plant Labs, Rocket Lab, and AST SpaceMobile. The answer is that nothing has actually changed with their businesses. All that is shifting is investor perception of the overall space sector. And even then, the big change is that SpaceX will hold an IPO. The business landscape for space stocks hasn't really altered one bit.

You can argue that investors will reconsider the valuation of all space stocks once SpaceX is public. However, expecting that Wall Street will suddenly find these companies permanently more attractive seems a stretch. It is far more likely that investor enthusiasm is getting a temporary boost from a high-profile company going public.

That's not a knock on Plant Labs, Rocket Lab, or AST SpaceMobile, but you should evaluate them on their own merits if you are considering buying them. SpaceX's IPO probably shouldn't sway your fundamental view of these businesses.

Reuben Gregg Brewer has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends AST SpaceMobile, Planet Labs PBC, Rocket Lab, and Tesla. The Motley Fool has a disclosure policy.