Wednesday was an amazing day to be a space investor. (Thursday was a bit less so!)
News that SpaceX is preparing to file its IPO prospectus, setting an official date for its IPO, and revealing publicly for the first time its actual annual revenue and earnings ignited space stocks of all stripes. Shares of AST SpaceMobile (ASTS 6.17%), the company that popularized the concept of direct-to-cell satellite-based communication, shot up 10.4% in response to the SpaceX news. Rocket Lab (RKLB 5.83%), which launches Electron rockets smaller than SpaceX’s Falcon 9 and is often described as an earlier-stage, not-yet-profitable SpaceX, did nearly as well — up 10.3%.
One day later, though, AST stock gave back 8.5% on Thursday, and Rocket Lab dropped 9.5%.
That might give you a clue as to how to answer the question: “Should you buy AST SpaceMobile and Rocket Lab?” Because a lot of investors seem to have concluded that the answer is no.
Image source: Getty Images.
Don’t buy AST SpaceMobile stock
You can understand why investors were initially excited by the news that SpaceX will go public soon. As CNBC reports, the SpaceX IPO will be the world’s biggest IPO ever, raising $75 billion in new cash for Elon Musk & Co. and valuing his space company at $1.75 trillion. If SpaceX actually hits those numbers, its stock will cost at least 110 times trailing sales and well north of 500 times trailing earnings. Any other space company is going to look cheap by comparison.
But here’s the thing: They aren’t. And AST SpaceMobile is especially expensive.
SpaceX may cost 110 times trailing sales, but AST SpaceMobile stock costs 325 times sales. SpaceX stock may cost 500 times earnings… but at least it has earnings. (We think. Still waiting on that prospectus.) What’s certain is that AST SpaceMobile doesn’t have any earnings at all, because it hasn’t yet announced even beta service for the handful of satellites it has in orbit.
Today’s Change
(-6.17%) $-4.85
Current Price
$73.82
Key Data Points
Market Cap
$22B
Day’s Range
$71.85 – $79.86
52wk Range
$18.22 – $129.89
Volume
13M
Avg Vol
15M
Gross Margin
-14399.31%
Don’t buy Rocket Lab stock either
Is Rocket Lab any better? In some respects, yes. Rocket Lab launches its Electron rockets with regularity, and at an accelerating pace, generating consistent and growing revenue. The stock’s on a path to profit, and most Wall Street analysts agree it will probably earn at least something next year.
Valuation-wise, however, the situation is iffy. Rocket Lab stock costs nearly 60 times trailing sales today — only half as expensive as SpaceX, it’s true, but still costs quite the pretty penny. If I didn’t own Rocket Lab stock already, I probably wouldn’t buy it at its current high price.
Luckily for new investors, though, I think there’s a very good chance an opportunity will emerge to buy Rocket Lab stock more economically.
Today’s Change
(-5.83%) $-3.55
Current Price
$57.38
Key Data Points
Market Cap
$33B
Day’s Range
$56.13 – $61.64
52wk Range
$14.71 – $99.58
Volume
22M
Avg Vol
22M
Gross Margin
31.66%
Rich Smith has positions in Rocket Lab. The Motley Fool has positions in and recommends AST SpaceMobile and Rocket Lab. The Motley Fool has a disclosure policy.