So much for the looming SpaceX (SPCX) IPO causing a last-minute frenzy in space ETFs ahead of its Nasdaq Composite (^IXIC) debut on June 12.
The analysis: The Tema Space Innovators ETF (NASA) and the Procure Space ETF (UFO) peaked around May 28. Since then, they have fallen out of orbit with respective declines of 24% and 19%. Investors are likely raising cash to go all in on SpaceX — instead of erring on the side of diversifying for the space investment thesis.
Small-cap space company Planet Labs (PL) has seen its stock plunge 36% during this stretch. Rocket Lab (RKLB) has shed 24%.
A key distinction between the UFO ETF and the NASA ETF: UFO does not hold SpaceX, while NASA is currently the only space-themed ETF with SpaceX exposure through a special-purpose vehicle.
Rocket Lab is the top holding in the NASA ETF, followed by EchoStar (SATS). Rocket Lab is also the top holding in the UFO ETF, followed by Viasat (VSAT).
Bottom line: One shouldn’t rule out space ETFs getting another look — and soon — from investors if the SpaceX IPO is well received. The debut will shine a major spotlight on the advancements coming in space from all players, especially more established firms like Planet Labs and Rocket Lab.
“The earlier peak in the value of space shares could make the [SpaceX] IPO feel like 2001’s Star Gate sequence of initial order-book instability, ETF forced selling/buying, and index rebalancing. This could lead to liquidity fragmentation and volatility as the narrative becomes overloaded,” said FedWatch Advisors founder Ben Emons in a note.
He added, “Still, post-IPO investors are likely to position themselves in the company’s stock because of long-term expectations for massive capex cycles and a multi-decade infrastructure buildout, which can affect long-duration (free) cash flows.”
Brian Sozzi is Yahoo Finance’s Executive Editor and a member of Yahoo Finance’s editorial leadership team. Follow Sozzi on X @BrianSozzi, Instagram, and LinkedIn. Tips on stories? Email brian.sozzi@yahoofinance.com.
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