Key Points
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Rocket Lab looks like the strongest buy after the sell-off, given its growing business, deep backlog, and upcoming catalysts.
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AST SpaceMobile carries more risk, but improving execution and major regulatory wins make the recent pullback look more like an opportunity than a warning.
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When Space Exploration Technologies Corp. (NASDAQ: SPCX) went public last month, it didn’t just mint a new trillion-dollar stock; it sucked the air out of the room for every other space industry stock on the market. Investors sold shares of nearly every other space company to free up cash for the shiny new giant, and the whole group tumbled in what I like to call the “SpaceX Effect.”
Rising interest rates helped compound the sell-off, hitting these long-duration growth stories especially hard. To me, that kind of indiscriminate, sentiment-driven sell-off is exactly when opportunity shows up.
Here are two names I’d buy the dip on without hesitation.
Rocket Lab: a real business on sale
Rocket Lab (NASDAQ: RKLB) fell sharply during the pullback, and I think that’s a gift. Unlike most of the sector, this is a genuine operating business with two growth engines, launching rockets while also building satellites and components for other customers. The company reported revenue that grew more than 60% year over year in its most recent quarter, backed by a multibillion-dollar backlog. The catalysts ahead are meaty, too: its larger Neutron rocket is targeted to make its debut later this year, it just qualified to compete for the Space Force’s $5.6 billion national-security launch program, and it’s buying its way toward full vertical integration with a deal for an operating satellite constellation. The dip lowered the price on a company that is arguably furthest along the path to standing on its own.
AST SpaceMobile: the moonshot with catalysts
AST SpaceMobile (NASDAQ: ASTS) is the more speculative of my two picks, but the sell-off makes its risk-reward more attractive. The company is building a network to beam broadband from satellites directly to ordinary smartphones, and it just cleared its biggest regulatory hurdle by winning U.S. commercial authorization. It’s launching satellites on a real cadence, sits on billions in cash, and has locked in more than a billion dollars of contracted commitments from wireless carriers. The stock got swept lower with everything else, even as its actual progress accelerated — the kind of disconnect I like to buy into.
The risks investors need to accept with these 2 stocks
I won’t pretend these are safe. Rocket Lab still has to fly Neutron on schedule, and new rockets are notorious for development delays. AST isn’t consistently profitable and is spending heavily to build a network that must work at scale. Both are volatile and tied to a boom-and-bust sector. “Without hesitation” reflects my conviction in the long-term stories, not a belief that the ride will be smooth.
SpaceX knocked down good companies across the board, and that’s precisely the dislocation patient investors can exploit. I’d buy Rocket Lab as the sturdier, revenue-generating anchor and AST SpaceMobile as the higher-upside swing, sizing each as a speculative position. The market sold the sector on rotation, not on broken fundamentals, and that gap is the opportunity.
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Micah Zimmerman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends AST SpaceMobile and Rocket Lab. The Motley Fool has a disclosure policy.
