Friday's SpaceX IPO Was Bad News for Space Stocks. These Experts Thinks They Can Rise Again

KeyBanc upgraded Rocket Lab and Firefly Aerospace to overweight and set price targets of $135 and $50, implying at least 40% upside from recent levels. The firm argues the post-SpaceX selloff in space stocks was unwarranted, pointing to Rocket Lab's $2.2 billion backlog, Neutron rocket timeline, and Nasdaq 100 inclusion on June 22 as potential catalysts. Firefly is also tied to NASA lunar programs and could benefit if it establishes a reliable launch cadence.

Analysis

The immediate read-through is not “space beta is back,” but that the market is starting to differentiate launch-enablers from pure sentiment names. RKLB is the clearest institutional winner because it has a visible path from narrative to index-driven flow: inclusion mechanics can create a multi-week demand dislocation on top of fundamental rerating, while its backlog gives it a cushion if the broader theme cools. FLY is more of a later-stage option on execution; its upside is larger if it proves cadence, but the market will punish any schedule slip much faster than it will for RKLB.

Second-order effects matter more here than the headline upgrade. A healthier space complex should support suppliers in propulsion, avionics, components, and ground software long before it benefits the moonshot end-market, because those businesses monetize rising launch activity without needing a full consumer-investor reopening of the sector. That also means the weakest links are the pre-revenue or story-driven names: if capital rotates toward “real” operators, sentiment can remain negative for SPCE and still weigh on broad space ETFs via index and factor exposure.

The contrarian point is that this may be less about a durable sector inflection and more about a forced comparison to SpaceX. The market likely overreacted to the idea that one high-profile listing absorbs all scarcity value in the theme; in reality, public equities with order visibility and near-term catalysts can coexist and even outperform as the category expands. The risk is a quick fade if the IPO hype cools and there is no fresh launch or contract news over the next 4-8 weeks, because these names still trade on event timing as much as fundamentals.

Key Decisions for Investors

• Long RKLB vs. short SPCE for the next 1-3 months: RKLB has the cleaner catalyst stack (index inclusion plus backlog visibility), while SPCE remains a sentiment liability if space multiple compression resumes.
• Initiate a tactical long in RKLB on any post-rally consolidation; target a 2:1 reward/risk over 6-10 weeks, with invalidation if momentum fails after index flows complete.
• Buy FLY only as a smaller, higher-beta satellite position sized at half of RKLB risk; treat it as a 3-6 month execution call, not a core hold, because cadence proof is the real catalyst.
• Use UFO or related space ETF strength to reduce exposure into pop days; the ETF basket is more vulnerable than single-name winners because it likely captures the weakest companies and dilutes the fundamental upgrade signal.
• If available, express the theme with a pair: long RKLB / short a basket of unprofitable space-adjacent names, aiming to isolate operational quality from pure narrative beta.