Why Rocket Lab Stock Keeps Dropping

Is Space Exploration Technologies (NASDAQ: SPCX) stock bad for space stocks? In a year when Rocket Lab (NASDAQ: RKLB) stock more than doubled ahead of the SpaceX IPO, that seems a strange question, but here's the thing:

SpaceX might be both good and bad for space stocks like Rocket Lab.

Case in point: This morning, SpaceX announced plans to float (a rumored) $20 billion of debt in what it's calling its "Inaugural Bond Issuance." SpaceX stock is down 10.7% through 1:10 p.m. ET on the news, and Rocket Lab is down 7.2%.

Image source: Getty Images.

SpaceX wants (not needs) a loan

SpaceX raised more than $80 billion in its initial public offering. Post-IPO, SpaceX already has "approximately $100.8 billion in cash and cash equivalents."

So why is it seeking another $20 billion?

The biggest clue is SpaceX emphasizing the "inaugural" nature of this bond issuance. There's never been a market for bonds of a publicly traded SpaceX before. Presumably, one thing SpaceX hopes to accomplish is to gauge how popular its bonds are with investors today -- how much money it could raise if it needed to, and how much interest it would have to pay.

What this means for Rocket Lab stock

This is why I consider the bond offering neither good nor bad news for SpaceX stock. But for Rocket Lab stock, I fear the SpaceX bond offering might be bad news.

Think about it. SpaceX just held an IPO that sucked $80 billion out of the market for space investors. Now, SpaceX is raising another $20 billion from investors looking to lend money to space stocks.

SpaceX is sucking all the figurative air out of the room. Cash-burning space stocks like Rocket Lab could soon find it harder to raise the money they need.

Rich Smith has positions in Rocket Lab. The Motley Fool has positions in and recommends Rocket Lab. The Motley Fool has a disclosure policy.