2 Space Stocks to Buy in August

McKinsey estimates the space economy could reach $1.8T by 2035, supported by lower launch costs and rising public/private investment. SpaceX is highlighted for cutting launch costs via reusable boosters (reused 15–20 times) but faces investor concerns over heavy cash burn; Piper Sandier expects capex around $65B in 2027 (+$17B vs prior view) and Musk targets ~$100B annualized revenue by Dec-2026. Rocket Lab is set up as a “neutral” alternative, including a $266M U.S. Space Force contract for 12 suborbital launches and an $8B acquisition of Iridium, while its shares are down ~51% from its high—framing both names as long-term picks despite volatility.

Analysis

The market is still pricing the space theme as a TAM story, but the equity winners will be the names that monetize launch access rather than the ones that merely enable it. RKLB has the cleaner setup because defense cadence and space-systems content create more recurring revenue than pure-launch exposure; that shifts the debate from “can they launch?” to “can they convert backlog into durable margins?” SpaceX’s pricing power remains the structural headwind for anyone trying to win on heavy lift, so smaller players only deserve premium multiples if they own niche, government-backed, or vertically integrated economics.

The Iridium transaction is the real second-order catalyst. If funded with equity or expensive debt, it can become a dilution story before it becomes a synergy story, especially if launch margins stay under pressure from SpaceX. IRDM itself is less a standalone upside trade than a spread/arb instrument once terms are clear; the key variable is not the strategic rationale but whether the deal improves RKLB’s cash conversion or simply adds balance-sheet complexity.

Contrarian view: the consensus is likely underestimating how little of the projected industry growth accrues to minority shareholders in capital-intensive hardware. In the next 1-3 months, the stock reaction should be driven by financing terms, contract conversion, and any evidence that gross margin is inflecting; over 6-18 months, the test is free cash flow. If RKLB cannot show operating leverage by the next print, the current rerating can unwind quickly even if the broader space narrative stays intact.

Key Decisions for Investors

• Long RKLB on pullbacks over the next 1-3 months; target a 15-25% upside if the Iridium financing is accretive and defense backlog converts, but cut if the next earnings print shows no margin improvement.
• Pair trade: long RKLB / short PL or LUNR for 3-6 months to express preference for vertically integrated, defense-linked space exposure over more episodic pure-play names; invalidated if the shorts win a major government contract cycle.
• Do not chase IRDM until deal structure is public; if the acquisition is stock- or debt-heavy, expect the spread to widen and consider using IRDM only as a merger-arb instrument once terms are verifiable.
• Use any broad space-rally extension to fade the basket via SPCX rather than single-name outright shorts; the fastest way to monetize skepticism is to short the theme when valuation outruns financing visibility.