Why Did the Space Sector Suddenly Collapse? June's Selloff Explained

A few days ago, the hot topic of “Space is next after AI” quickly cooled down in June. As major stocks have lost double digits in just one week, there is talk going around in the market that “Isn’t the bubble about to burst?” Today, I will calmly summarize what happened and why I failed.

How much and how did it fall?

If you look at the fall, you can feel the atmosphere. In the first few days of June, leading space stocks such as AST Space Mobile, Rocket Lab, Virgin Galactic, and Red Wire plummeted by up to 15% at one point. Even AST Space Mobile, which rose 83% this year, fell 15% in one day.

The shock of Rocket Lab, a major stock, is the most symbolic. Rocket Lab fell approximately 25% from this year's high point, entering the so-called 'local bear market'. In terms of market capitalization, the ransom, which once exceeded $86.8 billion, has shrunk to around $65 billion. More than $20 billion in value evaporated in just a few days. The space industry ETF 'Procure Space ETF (UFO)' was also pushed down, and the entire space-themed basket bundled by Bank of America showed weakness.

But why suddenly?

The biggest trigger was, paradoxically, SpaceX. So far, the anticipation of Space When SpaceX's corporate value was mentioned as a whopping $1.8 trillion, investors started asking the opposite question. “With such an overwhelming number one, will the remaining companies be able to compete?”

In fact, the large launch vehicle ‘Neutron’ being developed by Rocket Lab collides head-on with SpaceX’s ‘Falcon 9’. However, SpaceX already has an overwhelming advantage in scale and cost. Here, investment bank Jeffries proposed a strategy of 'Betting against SpaceX (betting against competitors instead of betting against Space Previously, Blue Origin's rocket explosion shook investor sentiment, and there was even news that Rocket Lab executives and insiders sold about $18 million worth of shares when the stock price was at its peak. The fact that the people who know the company best sold at the highest point does not read positively to outside investors.

The 'SpaceX listing', which was good news when it was going up, became equally bad news when it was going down. As the expectations for the theme were high, the reversal was quick when doubts began.

So has the bubble burst?

The essence of this plunge is not 'new bad news' but rather a flood of questions that had been put off for a while. It is close to . Many space stocks are momentum stocks that are driven by 'expectations of profits in the distant future' rather than immediate profits. When the atmosphere is good, the expectation alone can cause stock prices to skyrocket, but once you have doubts, you have no choice but to weaken in front of the question, “So when do you actually make money?”

However, the industry itself is not disappearing. There are companies like Rocket Lab that are actually accumulating sales and orders, and demand for satellites, launchers, and defense is still growing. Whether this adjustment is the ‘end of a theme’ or ‘a beat to cool down’ ultimately depends on whether each company achieves performance that meets expectations. So, rather than getting caught up in the whole theme, it is a time when we need to be calm and consider the money each individual company is actually earning and the work it has received.

This article is for informational purposes and is not a recommendation to invest in a specific stock.