3 Space Stocks Down More Than 50% From Their Highs
Key Points
Leading up to the SpaceX IPO, many space stocks began to go into a tailspin.
These companies have promising growth opportunities, but they are also all unprofitable.
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Space stocks are struggling mightily. Whether it's due to the hype around Space Exploration Technologies Corp (NASDAQ: SPCX), also known as SpaceX, or investors being more cognizant of rising valuations, there's definitely a bit more concern in the sector of late.
SpaceX has been falling sharply, and three other top names in space are also down big. Planet Labs PBC (NYSE: PL), Rocket Lab Corporation (NASDAQ: RKLB), and AST SpaceMobile (NASDAQ: ASTS) are all down more than 50% from their highs. Let's take a closer look to see if there are any good buying opportunities amid these free falls.
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Planet Labs
Shares of Planet Labs are barely in positive territory this year, up around 3%, after going on an incredible run earlier. The space stock hit a high of nearly $52 back in late May, but it's been in a tailspin since then. Now trading at around $20, it's down more than 60% from its high.
When it reported earnings back in early June, the satellite imaging company showed solid 42% revenue growth, with its top line coming in at $94 million. However, with its operating loss rising from $23 million a year ago to just under $35 million, that may have raised investor concerns about its long-term viability, particularly as it scales its operations.
Plus, with SpaceX likely drawing in much of the investment dollars aimed at space in the future, many investors may have been pushing the eject button in anticipation of that; Planet Labs' stock was already in decline before its earnings numbers came out.
With profitability nowhere in sight and the stock's valuation remaining fairly high at more than $7 billion, this isn't a stock I'd rush to buy, despite its sell-off.
Rocket Lab
Rocket Lab manufactures spacecraft and satellite components. It also provides launch services, making it a more attractive space investment overall. But for growth investors, SpaceX may still have more appeal given its grand visions of travel to Mars.
Like Planet Labs, Rocket Lab's stock also peaked around late May, hitting a high of $151. On Tuesday, it was trading around $64, down about 58% from that level. Rocket Lab spiked significantly after it reported earnings in early May, following strong results for the first three months of the year. Revenue of $200 million was up an impressive 64% year over year, and its backlog was a record $2.2 billion, up 20% quarter over quarter.
Rocket Lab also incurred a loss, but at $45 million, it was lower than the $61 million loss it posted in the prior-year period. And the hope is that with its larger Neutron rocket, which is expected to have its first launch later this year, it could open up more opportunities and lead to profitability in the future. While the stock trades at 55 times revenue and isn't cheap, Rocket Lab may be an intriguing option for long-term investors who are willing to be patient.
AST SpaceMobile
Rounding out this list is AST SpaceMobile, whose shares are down 21% this year. It's a similar trend to the other stocks listed above: AST SpaceMobile peaked in late May and has been struggling ever since. At around $57, its share price is now down about 57% from its high of just under $134.
AST SpaceMobile is a bit of a different space play, as it's building a cellular broadband network in space, with Starlink (which SpaceX owns) being a considerable rival that investors are likely worried about. AST SpaceMobile posted strong growth during the first three months of the year, with revenue of $14.7 million representing a significant improvement from the prior-year period, when this early stage growth company reported less than $1 million in revenue. However, with operating expenses totaling $164 million in the most recent period and competition a major concern, AST SpaceMobile faces significant challenges ahead.
Currently, the stock trades at close to 190 times its trailing revenue, and with massive capital investment needs and some sizable competition to worry about, AST SpaceMobile may have a hard time winning over growth investors; it could easily go lower in value.
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David Jagielski, CPA has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends AST SpaceMobile, Planet Labs PBC, and Rocket Lab. The Motley Fool has a disclosure policy.
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