SpaceX Pullback of Over 40% Drags Down Space Sector: Why VSAT and IRDM Can Buck the Trend and Surge?

TradingKey - SpaceX ( SPCX) has retraced more than 40% from its post-IPO high since its listing on June 12, currently hovering around $116, and remains below its offering price of $135.

As the sentiment anchor for the entire space sector, SpaceX's pullback quickly spread to the sector as a whole. In fact, the aerospace sector has recorded a one-way downward trend since SpaceX's listing on June 12. The Roundhill Space & Technology ETF (MARS), which tracks space themes, fell 8% on the day of SpaceX's listing and has accumulated a decline of about 23% over the past month, dragging down more than half of its top 10 holdings:

MARS is reportedly a highly concentrated space-themed ETF, with its top 10 holdings accounting for 68.34% of net assets, and its sector distribution purely focused on the three major sectors of "Industrials + Technology + Communication Services".

However, Viasat ( VSAT) rose 18% over the month, while Iridium ( IRDM) gained 7% over the month, becoming the rarest winners in the entire sector. The sector and individual stocks have moved in completely opposite directions in this rally.

Why Are VSAT and IRDM Bucking the Trend?

Amid sharp corrections in SpaceX, Rocket Lab, and AST SpaceMobile, Viasat and Iridium are the only two gaining stocks in the entire sector. The common keyword for both companies is spectrum.

The catalyst for IRDM is Rocket Lab's $8 billion acquisition. In mid-July, Rocket Lab acquired Iridium for $8 billion in cash and stock consideration. Iridium shareholders will receive $27 in cash per share plus Rocket Lab stock, for a total value of $54 per share, representing a 24.1% premium, with the transaction expected to close in mid-2027.

This transaction directly revalued Iridium's spectrum assets. As a global low-Earth orbit (LEO) satellite communications network founded by Motorola in the late 1980s, Iridium possesses globally coordinated L-band spectrum and 25,000 subscribers, covering government, aviation, maritime, and industrial markets. On the day of the acquisition announcement, Rocket Lab's stock jumped 10%, while Iridium surged by about 22%.

The thesis for VSAT is spectrum scarcity. Against the backdrop of SpaceX, Amazon, and AST SpaceMobile racing to expand Direct-to-Device connectivity capabilities, the globally coordinated L-band spectrum held by Viasat has become even more valuable.

With the acquisition of Iridium and Amazon turning to Globalstar, Viasat is seen as the last major independent spectrum play. Oppenheimer stated that it holds one of the largest portions of the most critical 'globally coordinated spectrum' in the emerging D2D market, while Raymond James estimates that its spectrum portfolio could be worth up to $16 billion.

In addition, Viasat and Intelsat recently secured a contract of up to $430 million from the U.S. Space Force to manufacture the first two operational on-orbit satellites for the PTS-G system. Meanwhile, Oppenheimer expects the company's core business is approaching a free cash flow inflection point. Viasat has contributed part of its spectrum to Equatys, a joint venture with Space42, but the company has not locked itself in and still retains the flexibility to sell, lease, or engage in broader strategic transactions.

Viasat Has More Growth Potential Than Iridium

Currently, several Wall Street investment banks remain optimistic about ViaSat's prospects, collectively issuing a "Strong Buy" consensus rating. As of press time, a total of 8 analysts have rated ViaSat over the past three months, with the highest target price at $130.00, representing about 76% upside from the current price; the lowest target price is $51.00, implying about 31% downside, and the average target price is $95.29, which still offers considerable growth potential compared to the current stock price of $74.

Although a portion of the spectrum resources of both ViaSat and Iridium has already been deployed in existing business operations, ViaSat is pushing forward with the Equatys joint venture project with Space42. Raymond James noted that there remains uncertainty as to exactly how much spectrum the two companies can commercialize and monetize, and its ultimate value will depend on use cases, total addressable market (TAM), and buyer appetite in a sale transaction.

Since the two companies' existing L-band businesses primarily serve niche applications such as mobile and emergency services, a significant portion of potential "idle spectrum" remains outside of current operations. This characteristic brings incremental optionality to the companies, with ViaSat's incremental potential being particularly prominent. Consequently, Raymond James sharply raised its target price on ViaSat from $50 to $74 and maintained its "Outperform" rating.

Viasat Poised to Become Value Anchor for Space Sector

Looking back at this round of correction in space stocks, the overall landscape has shown clear divergence.

First, SpaceX dragged down the performance of the sector. SpaceX's fall below its issue price was the direct trigger for the sector's correction, as the company itself faces the dual test of lock-up expiry pressure in August and Q2 earnings validation.

Second is the divergence within the space sector between "rocket stocks" and "spectrum stocks." Rocket and satellite manufacturing plays (ASTS, RKLB) were the hardest hit by SpaceX's break below its issue price and depressed sector sentiment; meanwhile, VSAT and IRDM, which possess non-replicable assets such as L-band spectrum, weathered the correction to emerge as winners. GSAT, as Amazon's spectrum partner, is also part of this narrative.

In the coming month, SpaceX's August lock-up expiry and Q2 earnings will remain crucial anchor points for the entire sector. If a scenario of declining volume and price occurs in the Q2 earnings, further downward valuation revisions will hit sector sentiment once again; however, if the scarcity logic of spectrum assets continues to be validated, ViaSat's independent rally could become a new value anchor for the entire sector.