These 2 Space Stocks Skyrocketed 388% and 174% in 2025: Here's 1 Reason I Wouldn't Buy in 2026.

The article argues space stocks are “too hot” after SpaceX’s IPO, warning Rocket Lab and Planet Labs are still not profitable and trade at extreme valuations. Rocket Lab has nearly $50B market cap on ~$660M trailing revenue (P/S ~75) despite a $2.2B backlog and a recent Iridium Communications acquisition; Planet Labs shows revenue growth (+42% YoY to $94M) but still lost $247M last year and trades at P/S ~27. With the Fed potentially raising rates, the author expects risk appetite to cool and suggests waiting for more concrete results before buying.

Analysis

The key mechanism here is not “space” enthusiasm itself; it is duration risk. When rates back up, the market stops paying up for distant terminal cash flows, and that hits RKLB first because its valuation assumes multiple years of flawless execution before profitability. A speculative IPO from a private sector bellwether can temporarily lift the whole basket, but it also raises the bar for public comps once investors ask whether those growth rates are actually financeable.

PL is the cleaner business model, but it is still being priced like software while carrying meaningful hardware economics and capital intensity. That creates a hidden spread trade: recurring government/data revenue should hold up better than launch-adjacent names, yet the stock can still de-rate if the market decides growth is not converging to margin fast enough. IRDM looks like the more defensive asset if capital rotates from narrative to cash flow, while RKLB is the most exposed to any setback in cadence, launch timing, or funding conditions.

The contrarian point is that this may be less about “froth” and more about a real-but-mispriced government/defense pipeline. If contract conversion accelerates and the Fed turns dovish, the sector can re-rate for 6-18 months; if not, this is a valuation repair story over the next 1-3 months. The bear case is falsified by a successful Neutron execution path, better gross margin inflection, or a clear decline in real yields; absent those, any rally is likely a sellable liquidity squeeze.

Key Decisions for Investors

• Short RKLB on strength or via 6-12 month put spreads; thesis is multiple compression plus execution risk, with the trade invalidated by a clear Neutron milestone or materially better-than-expected guidance.
• Relative-value pair: long IRDM / short RKLB for a months-long rotation from speculative launch exposure toward recurring cash-flow communication assets; best entered after any sector-wide squeeze.
• Avoid outright longs in PL until next earnings proves backlog conversion into margin leverage; if you want exposure, use it only as a smaller sizing candidate versus RKLB because the revenue model is less binary.
• Set a watch item on real yields and Fed guidance: if rates fall and risk appetite returns, cover short exposure quickly because these names can re-rate violently on sentiment alone.
• If forced into a sector hedge, prefer the cash-flowing incumbent side of space over the pre-profit names; do not own the basket indiscriminately until financing conditions and launch cadence improve.