The SpaceX logo is displayed on a building at Kennedy Space Center in Cape Canaveral, Florida. [AP]
The SpaceX logo is displayed on a building at Kennedy Space Center in Cape Canaveral, Florida. [AP]

Shares of leading US space companies SpaceX and Rocket Lab have been cut roughly in half in about two months. Analysts say the selloff does not reflect a dimming outlook for the space industry itself — rather, expectations had climbed so high that even minor disappointments are sending the stocks sharply lower.

SpaceX closed at $114.92 on Thursday, down 49.07 percent from its intraday high recorded on June 16. Rocket Lab, which hit an all-time high of $151 on May 27, has also tumbled, closing at $75.67 — a decline of 49.89 percent.

South Korean ETFs tracking US aerospace and space technology have taken a direct hit as well. As of Friday, the KODEX US Aerospace & Space ETF — in which SpaceX and Rocket Lab together account for more than 35 percent of holdings — posted a one-month return of minus 23.44 percent, while the TIGER US Space Tech ETF recorded minus 21.2 percent.

Neither company is yet at a stage where earnings alone can justify its valuation. SpaceX in fact delivered second-quarter results that beat market expectations, yet the share price has failed to gain traction — because what underpins the stock is not current earnings but a future growth narrative.

SpaceX's second-quarter sales came in at $7.81 billion, up 91.9 percent year-on-year and 14.5 percent above consensus. Starlink subscribers grew by about 1.7 million quarter-on-quarter, surpassing 12 million, while revenue from the AI division surged 247.5 percent.

Growth was demonstrated, but the market has put a question mark over the company's ability to recoup its capital expenditure. Concerns have grown because capex is running well above quarterly sales and is expected to continue at that level throughout this year.

Second-quarter capex reached $18.37 billion, exceeding consensus by 45.1 percent and more than doubling quarterly sales. Of that total, $15.83 billion — or 86.2 percent — was directed toward the AI segment. The sustained heavy spending drove free cash flow to an outflow of $25.01 billion, a sharp deterioration.

"The fact that capex is running well above quarterly sales and will continue to do so throughout the year means that verifying the company's ability to recover that capex will be the key basis for any investment decision," said Park Jun-gyu, a researcher at Samsung Securities.

The company has indicated that capex in the third and fourth quarters will remain at a similar level to the second quarter, while setting a target of recovering AI capex within one year — but the market has yet to be convinced.

Another variable is the expiry of the lock-up period on 911.5 million shares held by SpaceX employees and early investors — a larger volume than the approximately 639 million shares that came to market at the initial public offering. SpaceX plans to release the locked-up shares in stages over the coming months.

"About 7 percent of the locked-up shares are set to be released sequentially at two-to-three-week intervals through the end of October, and both the overhang concern and the actual scale of selling could act as short-term downward pressure on the share price," said Choi Mu-jun, a researcher at NH Investment Securities.

Rocket Lab, which reports earnings on Tuesday, also faces the task of proving its future growth potential.

The key things to watch in the earnings release are not simply sales and profit figures, but the progress and launch schedule of the company's large rocket, Neutron. Neutron is a large, reusable rocket designed to carry heavier payloads than the company's smaller Electron rocket.

"Rocket Lab is still at a stage where it is difficult to value the company on earnings," said Jo Jae-un, a researcher at Daishin Securities. "That means it is a future growth narrative — not earnings per share — that supports the share price, and stocks like that react sharply when even a small part of the story wavers."

"Even if sales beat market expectations, the share price could fall if the Neutron schedule slips," Jo added. "Conversely, even if the quarterly numbers disappoint somewhat, the stock could jump if the timeline is brought forward."


jiyun@heraldcorp.com