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

The article warns that space stocks have become overly speculative following SpaceX’s record IPO, citing extreme valuations—Rocket Lab trades at ~75x trailing sales on ~$660M TTM revenue with a ~$50B market cap, while Planet Labs trades at ~27x sales despite still being unprofitable (loss of ~$247M last year). Planet Labs’ latest revenue is up 42% YoY to $94M and it has an $816M backlog, while Rocket Lab is due to launch its Neutron reusable rocket by year-end (previously delayed) and has a $2.2B backlog. With a potentially hawkish Federal Reserve that could reduce risk appetite, the author suggests waiting for speculative froth to fade and for more concrete profitability progress before investing.

Analysis

This is less about space as an industry and more about the market’s tolerance for long-duration storytelling. If real yields stay sticky or rise, the first thing to break is not backlog quality but the willingness to finance future optionality at venture-like multiples; that hits the most expensive pre-profit names first, with RKLB likely the highest beta. The key mechanism is multiple compression, not an immediate collapse in operating demand, so the pain can arrive well before fundamentals visibly weaken.

The second-order winner is the more mature, recurring-revenue part of the ecosystem: names with contractual cash flows, lower capex intensity, and less dependence on continuous equity issuance should hold up better than launch/imaging pure plays. That makes IRDM the cleaner relative-value expression versus the speculative basket, especially if capital markets stay cautious and investors stop paying for every incremental contract as if it were near-term margin. On the flip side, any company that needs frequent funding or repeated delays to large technical milestones faces a financing overhang that can turn a valuation story into dilution risk.

Contrarianly, the market may be underestimating how sticky strategic demand can be once defense and government workloads are embedded; backlog alone is not enough, but it does reduce the odds of a true fundamental air pocket. Still, the overhang is real: a hawkish Fed, a weak post-IPO performance signal from the broader space complex, or one high-profile execution miss could trigger a fast de-rating over days to weeks. The thesis is most vulnerable if RKLB delivers a clean technical milestone plus improved cash-flow guidance, or if PL shows accelerating margin inflection rather than just revenue growth.

Key Decisions for Investors

• Short RKLB on strength over the next 1-3 months; use it as the purest expression of long-duration multiple compression. Risk/reward favors a fast 20-30% air-pocket if rates stay restrictive, with the thesis invalidated by a successful milestone and upward guidance revision.
• Pair trade: long IRDM / short RKLB for a 3-6 month horizon. The spread should benefit if investors rotate from speculative backlog narratives into recurring revenue and lower financing risk; cover the short if RKLB proves launch execution and the relative strength gap narrows materially.
• If PL is tradable with liquid options, prefer a defined-risk bear call spread rather than outright shorting for 1-2 months. The idea is to monetize rich sentiment-driven premium while limiting squeeze risk if defense-related demand headlines support the name.
• Treat any post-IPO enthusiasm in SPCX as a sentiment barometer rather than a fundamental signal; if volume fades and the aftermarket trades poorly, add to shorts in RKLB/PL rather than chasing the new issue directly.
• Watch the next Fed meeting and 10Y real yields as the main catalyst pair; a dovish repricing would likely unwind the short thesis quickly, while another hawkish surprise would likely extend the de-rating window by 1-3 quarters.