This Is A Historic Buying Opportunity (99% Will Miss It)

Renewed interest in the [music] tumbling space stocks this earning season. Will these ever see a full comeback? Joining us today is market feed analyst Thomas [music] Hughes with a look at some of the biggest names in the space sector and what is happening with some of these stocks. Thomas, it's been a really rough summer for space stocks. Uh kind of starting with SpaceX, but did well for a couple of days and then we've just been on a downtrend ever since. Let's start out there. Uh what do you think has been happening in this whole space sector? Well, there's a lot of potential and there was maybe not so much hype because I don't think the SpaceX IPO was hyped [snorts] so much, but there was so much anticipation and so much demand, a lot of expectations. The stock was priced very high to begin with and so it just had, you know, trouble with traction, you know, and in all of that, the the IPO also sapped some appetite for other space stocks. So, we saw those stocks kind of suffering while investors were buying into into SpaceX. the post SpaceX IPO price action has been pretty bearish and it's kind of weigh down the market in general. But I think now we're kind of coming to this transition point in the market where SpaceX is unleashing uh the space story. It's allowing investors to get more involved into the space story. But I think now instead of being just focused on SpaceX, we can start paying some more serious attention to the other space stocks which have some traction may have some advantages I think to SpaceX for the near-term and for the long term. >> Yeah. Well, we are going to dive into SpaceX and their first earnings report that just came out and then we're going to talk about three other key space stocks that are really already starting to show a lot of strength in their reports and some high expectations for earnings coming yet next week, too. So, we're going to get into those three other names in space. These are just three of the key players, but there are so many other names in the space sector that a lot of investors are interested in and that you should be following. So, while we're diving into three of them in this video, you can find a much longer list with this special report all about the space sector. It is free for our viewers today. It's normally a $30 fee for people to find on MarketBeat. So, if you want to check this report out for free right now, scan the QR code or click the link in the description of this video to get this free special report on the whole space economy and which stocks every investor should at least have on their watch list that are going to be some strong players as this space story plays out. Again, make sure to get that report while you can now on Market B with a special offer in this description. All right, Thomas, we'll dive into those three other space names soon, but first, let's start out with SpaceX and what we saw come out of that earnings report this week. >> Uh, well, it was largely as expected. There was strong revenue and there was some strong cash burned. The article that I wrote, I say it like this, that SpaceX is burning rockets, burning cash to fuel its rockets, and that's straight up the truth. And they're burning money. Uh, the story coming out of this is they're planning to spend even more money in the upcoming quarters. that's having a big impact on the profitability outlook. There certainly is revenue to be had. Uh but they're spending it like mad and uh to me that's a headwind for the stock price action. >> Yeah, some of that spending that's going on at SpaceX is going to show up uh very much so in the three space stocks we're going to talk about today, but we'll get into that a little bit later. I want to talk more specifically about SpaceX and the anticipation for growth and and what this company could become. And I think one thing I've heard from some investors is that this story is too far off. that investing right now, the real payoff, the real profitability of SpaceX isn't going to come for 5 to 10 years down the road. What do you think about uh what we're seeing initially from SpaceX now? And do what do you think about that long-term pipeline for SpaceX? >> I think that pipeline is probably on target. Um if you look at the SpaceX breakdown, space is a very small part of SpaceX, like less than a fifth of the business, I think, or maybe about a fifth of the business. Starlink and the AI business are much larger. Starlink is in space, but it's a ground focused business for connectivity. It's not rockets. It's not space infrastructure, space commerce, which is what SpaceX, the SpaceX portion is going to be. So, right now, the the SpaceX portion is very small. It takes a lot of capital. Starlink is very big and growing very quickly and very profitable, but all that cash is going into the rocket sales. The rockets are burning all that cash up. At the same time, the AI business is also good, but because of the huge ramp and the capital expense of building these massive supercomputers, it's also burning cash. So, right now, we're just expecting this company to take big bales of cash and throw them on a big bonfire of cash for the next couple of quarters, maybe for the next few years as it builds this infrastructure out. And and again, that's just a massive headwind for the stock price action. >> Yeah, the stock price action has been wild so far on SpaceX. And I I want to dive into what to do for investors uh in two different camps. You've got investors who really got in on the IPO right away or maybe even bought in early in the f first few days of trade for SpaceX when things were looking good. Uh and then the other group of investors who are those who are like I'm staying away from SpaceX for a while until things shake out. So uh looking to address both of those investors. Let's start with the first one and that's anybody who did get in on the initial IPO for SpaceX. Should you have already sold if you did get in on that initial IPO with how much this stock has dropped since the IPO or is it something that it's okay for investors to just buy a couple of shares and hold on to them to see what happens long term? >> Should is a very strong word. It all depends on the investors risk tolerance and what what their plan is. If you're looking at this for the long term, I think that buying and holding these shares is probably going to end up paying off. I recently saw a well-placed person who makes lots of noise on the television channels say that you should buy this stock for your kids, you know, not for yourself, but for your kids. So, when your kids are adults, 20, 30 years from now, you've you've you've reaped the the blossoming story of of space. But that outlook also suggests there's going to be some near-term volatility. So, in the near term, we have that cash burn offset by the strong businesses. So maybe with data centers, we see the company gain traction over the next year or so and turn profitable, which is the real the real key here. But maybe we don't. >> Yeah, there's a lot up in the air still with this company. Even though this one has a lot of cash to burn, uh there's just so much expense that has to go to building this out. So that buy the stock for your kid theory uh seems to be a good one. If you are looking to add this stock for the first time, whether it's for yourself or that next generation, what are your thoughts on when to buy near a bottom? I feel like this volatility is nowhere near over. Could we fall significantly further from where it is right now? When do you know uh now is the time to actually get in on this stock? >> There will be a clear signal in the results and in the stock price action right now. Some of the things that I see weighing on the price action that makes me not want to get in. Uh are one is analyst sentiments. They're still bullish on the stock. They've got, you know, strong ratings and they see upside with the price action, but this release has triggered them to reduce their outlook. So, right now, Cinnamon has kind of been undercut and that does not help stock prices advance or stay higher. And the other thing is the lockup structure. The IPO comes with a lockup. So, insiders and employees weren't allowed to sell shares. Usually that lasts like it's 100% lock up for, you know, 6 months or a year, whatever. But this lockup is different. the first tier of several staggered tiers um opened up just with the with the earnings report and that more than doubled the existing float. So that increases the liquidity, raises the chance of short sellers. Short sellers have already been selling into this market just presents a lot more available shares in a market that's already struggling to move higher. Uh so to me that just means that best case scenario we move sideways. Uh but worst case scenario uh this last couple of days of kind of market moving sideways is more of a stopping point on a on a downtrend and not a market bottom. >> All right. So to recap what I'm hearing from you is long-term you think SpaceX could be a good investment but potentially a decade down the road. Uh in the short term expect a lot more volatility and we may be nowhere near the bottom. Does that just about sum it up? >> Pretty much sums it up. >> All right. Well, let's move on to these other three names in the space sector, Thomas, and some of that trickle down effect that we're seeing from all of the spending that SpaceX is doing. Let's talk about that first company, and it's one that so many of our viewers have been very interested in. Let's talk about Redwire. They also just reported earnings this week. What are we seeing that stock do? >> Uh, this stock is advancing, and I think honestly Redwire might be a better play for SpaceX because it's more of a pure play. It's not focused on the launches so much. It's utilizing SpaceX's launches to get it stuff into into orbit. And there's a lot of demand for its products, which is infrastructure for companies that want to get into space. So, all these companies are trying to get into space, including SpaceX using Redwire's services and products for solar arrays and the platforms for orbiting structures. It's just uh the equipment that you need to be in space. What we see in the earnings report is accelerating growth, outperformance, new contracts underpinned by several entities expanding beyond the government. We've got a strengthening forward outlook and the company is um you know it's on track for profits. It's going to be quite a few years I think but possibly profits before SpaceX just given the way that SpaceX is investing in in so much. Uh SpaceX's real goal is to get to Mars. So, uh, you got to assume that this company is going to be spending money by the billions, uh, long into the future. >> It's nice to be a beneficiary of that spending for sure. And Redwire is one of those companies that's benefiting from all of the spending happening in space. And that is starting to show up in their stock price, but it has been a volatile time, much like SpaceX. And you can see in the chart here for Redwire, it's really been following some of that action in SpaceX. When that IPO hit, it fell so quickly from its highs. And I think the question that so many investors have, some people who bought closer to those highs, is when could we see this stock price get back to that above $20 range it was trading in just a couple of months ago. >> Yeah, it might take a little bit of time, but it does look like the company's getting traction. And now that we have some traction, we can look for results, earnings, and the pathway to the revenue and the pathway to profitability help to support the price action, help get the analysts to start uh lifting their targets, lifting their sentiment ratings, and to keep the uh the institutions buying. >> Now, we talked about SpaceX being a long-term story that the the real uh growth for that stock could be more like a decade down the road. Is it fair to say that Redwire could be in a similar case where the real profitability for this company is going to be long-term or uh is this one going to be see more short-term gains in profitability simply because it's helping to support all of these other industries in space? >> Yeah, I think it's got a shorter runway to profitability just because of its position. It's not having to invest so much in in the new technology to get people into space so much as provide them with the equipment to be in space once they're there. Um, as SpaceX and the other launch companies accelerate their launches and get more people, more enterprises into space, there will be even more demand for Redwire products. >> Let's address the investors here. Uh, the two different kinds again. Those who aren't in Redwire yet and those who are in Redwire. If you own Redwire and maybe you got in at its high or you got in early before it saw the really big jump ahead of SpaceX IPO, what's your advice for investors who are holding on to this stock right now? >> Just be prepared for some volatility. I wouldn't be surprised to see sharp pullbacks again, but now that we're gaining traction, I would think that each subsequent correction will meet support at a higher level, you know, creating an uptrend. Wait for that to happen, but target those those those dips for for heading to your position. >> Yeah. How about those who aren't in red wire yet? After an earnings report like this when we see a 10% boost in the stock price, is now a time when you want to look at adding red wire or do you want to wait until those earning headlines fade and there's less conversation about red wire? >> Well, you might want to wait for the price to soften a little bit. But now that we've got this release and the subsequent price action, that is a a signal that we're at a bottom and the market is just is trying to get some some strength and some more traction. So, it would be a signal to start to start um building a position. >> All right, let's move on to another name in space. This one has an earnings report coming out on Monday, but it's a huge name that so many investors have been investing in, not just in the last few months, but this one had already started gaining traction more than a year ago, and that is Rocket Lab. Uh, what are you seeing with this stock? >> Right. So, um, Rocket Lab is really getting some some affirmation with its its backlog and its new contracts. It's got a growing number of contracts with commercial and government entities. And a lot of this, uh, centers on its Flatalyte design. Now, flat light is a it's an innovation in satellites. Up until now, satellites have been boxy, bulky, huge cylinders with arms and arrays sticking out of them, which are really um ungainainely and and inefficient to pack into a spaceship that's going to outer space. So, they've created flatalytes, which are just these thin modular stackable satellites that are highly efficient. It's improving their ability to put a quantity of satellites into space. uh that's attracting its clientele but also providing utility because they're good satellites, lots of communications and surveillance capabilities. And on top of that, we've got the Neutron rocket debut coming up. It's bigger than the Electron rocket, but not quite as big as um SpaceX's Starship. So, it's going to be that that mid-range to be able to do more payload, more efficient sending of equipment into space, but not quite as expensive to design and develop and operate over time. But it really is supposed to unlock the company's commercial potential. As that service debuts, we expect to see the the revenue really start to pick up. >> Yeah, this is a name that has had uh a lot of demand over the last couple of years and we've seen the number of launches really increasing and their backlog of launches really increasing. So, I'm curious because this company already had its own story. it still was one that got really caught up in that SpaceX IPO noise where it saw a big boost ahead of the IPO and started to drop significantly after that IPO much like all of the space sector did. Uh how long will it take for that effect to kind of go away from this stock in Rocket Lab to really be in its own strength and to see the stock price really move on its own merits rather than the whole sector? >> Um it might not take that long. I think this last round of earnings report is helping to differentiate the opportunities here. SpaceX is a great play, but it's more of a conglomerate with several different segments that are helping each other. Rocket Lab is more of a pure play. And in that regard, it's got a shorter timeline to profitability. Uh right now, the analysts are looking for profits to occur within the next, you know, two to three years. And that's a pretty firm estimate compared to the ones we're getting for for SpaceX, which right now are are really unreliable based on the the new spending plans. >> Yeah. I want to talk a little bit more about what analysts are saying because Rocket Lab does have some pretty clear price targets here and it looks like some significant gains from where the stock is trading at today. So, if you are an investor who is looking to buy the dip in space, have you missed that dip already or is there still an opportunity to buy these stocks where it is today? Is Rocket Lab still a buy for you where it is right now? >> Oh, Rocket Lab looks like it's just begun its upswing. If you were looking for, you know, technical signals to buy on the dip, I think that it's giving one. As far as the analysts go, they are bullish. They've been lifting their their targets and their their ratings. We've got 22 tracking the stock. That's pretty solid number. They're looking for over 40% at the midpoint. So, to me, that's that's a pretty good upside. Um, so assuming we get some more positive results, this market could be back to all-time highs by the end of the year. >> Yeah. Well, we'll find out those results on Monday. Earnings report comes out for Rocket Lab on Monday. is Redwire kind of a preview of what could happen with Rocket Lab's stock price on Monday where we saw a 10% jump in Redwire the day after earnings. Could we see some similar price action in uh Rocket Lab on Monday after their earnings? >> Totally. You know, investors looking to uh to profit from space are looking for good news right now. I think that they're kind of cooling on the SpaceX opportunity. So, if we get some some positive results from Rocket Lab, we can surely see the stock price advance. All right, one more question with Rocket Lab and that is do you also see this one as a long-term investment for people who are looking to invest in space? This one you said might have sooner near-term gains because of the demand and their their own unique business that they're doing. But is this one that you know 10 years from now the value of this company could be far greater than where it is today? >> Oh, it looks that way. It is the number two player in launches. Space is expected to be pretty big. So, uh there's no reason to not believe that right now. >> All right. Well, Rocket Lab again, number two player. We're talking about some big names in space, but there are tons of other names to look at. Again, a reminder, if you want to check out some of the other key players in this space race story, check out this special report on marketbeat.com. You can scan the QR code or click the link in the description to see the best space stocks every investor should at least have on their watch list. If you haven't checked out this report yet, it's totally free today just for our viewers on this channel. So, scan the QR code, click that link in the description, and make sure to check out all the names on that report. Now Thomas, you have one more space stock for us today. This is another really popular name that saw some huge gains right before that SpaceX IPO. Let's give an update on Space Mobile. >> Right. Uh so this company has been struggling with its stock price same as all the other uh space stocks. Part of its trouble is the lumpiness of its revenue right now. It's still ramping its technology. It's still getting it consolation into space. um a lot of its revenue now is based on um existing contracts for government uh services um and its real revenue growth is in the future. So with kind of sporadic revenue and lumpiness in the results and really kind of an uncertain outlook for profitability, it's hard for the stock to get traction. But what we need to remember is what they're doing is creating a network of inspace 5G satellites for Earth services. Right? They're going to make 5G available everywhere all the time. It's already got contracts with all of the major mobile providers. Once the network is up and running, it's pretty much going to be a service provider going on 100% of the 5G market globally, which is huge. It's going to get a meter of all the all those conversations, all that traffic, and its revenue is going to explode over the next few years. So, how it unfolds over the next few quarters, next year or so, it's going to be kind of spotty. But in 3 years, 5 years from now, this company's going to be bringing in 5 billion, 6 billion, 7 billion and showing profits. So with this one, lumpiness, volatility in the stock price action, but long-term, we're going to get this catalyst, and I think the stock price will really explode to the upside when it gets that catalyst. >> Yeah, there's so much to to unpack with this name because the the stock chart is wild. The the price action has been wild, but I want to start with the actual business itself. And if you are concerned at all about execution risk, this is a company that like all the others in space has to invest a lot of capital to actually build out this infrastructure. And with each launch this company has, we've also uh in the past historically seen some positive or negative price action, if they've had those failed launches or uh if something goes well or if it doesn't go well for this company. So any execution risk here that you're concerned about with A? Oh, >> there's plenty of execution risk. Uh but that's mostly going to be with getting their satellites into space. Right now they are getting them into space. It's it's slow but it's happening. Uh they did have that one setback earlier in the year but even that is just a temporary stumbling block. Um the way that it's looking right now is each subsequent satellite or subsequent batch of satellites is going to be an upgrade in technology improving upon what happened before. So, we're already looking at the next batch of satellites coming out to far exceed the capacity of the ones that we've lost. So, you know, it is a hiccup and a hurdle, but it's just a matter of of of the timing. And like I said, it's going to be lumpy on the in the front end, but as the company gets it network operational, uh the revenue growth is going to be pretty phenomenal. >> Yeah. And let's give a timeline on the revenue growth too. Uh building out this network and actually becoming profitable. How long uh of a timeline do you see for A compared to some of the other space companies we talked about? >> Well, we're looking at pretty significant growth this year in the low 100% range. Uh next year it's going to start to really accelerate because we'll have more satellites in space and more coverage and then we're going to sustain a triple digit pace for the next year or two after that. As far as profitability goes, we're looking to see profits, you know, by 2028. So, possibly by the end of next year and potentially sooner just depending on how quickly they're able to get their satellites up into space. >> All right, let's talk about the price action on the stock chart with this one. Uh, one main question I have when you look at the peak where this one was, you know, nearly 140, we're trading at half of that today. Do you think that there in some cases was a healthy pullback here? Do you think at nearly 140 the stock was trading far above where it should have been? Well, this is a market that's being driven on expectations. And right now, the expectations for the future are huge. The near-term reality isn't so great. So, that's why we see those big giant price swings. Right now, down around $60, I think it's pretty fairly valued for where the company is today. Up around 120, it's definitely going to be priced to perfect execution, expecting it to, you know, unfold or to proceed with it strategy and get a satellites into space. So over time, as those satellites get launched and the services come up, I think that the stock price could easily reclaim that all-time high level and and keep moving higher. >> Yeah. Let's talk about near-term price action. Right now, we're up about 20% in the last 5 days on this stock. So, a nice boost from the lows where it was at just a few days ago. And then this one also has earnings coming up on Monday. Do you think we could see some more positive price swings on this stock next week after earnings? >> Oh, absolutely. This market wants a catalyst. It wants to see those good results. we get a good report. If it's strong, we should see the stock price start to move higher, especially if it affirms a clearer pathway to revenue and profits. Um, any delays though will be will be seen in the stock price and we could potentially see a lower low in that in that scenario. >> All right, so this one, much like the others that you talked about, it sounds like long-term uh a lot of potential here, but in the near term, expect more volatility. Does that pretty much sum up the entire space sector right now, Thomas? >> Absolutely. You know, space is a place for investment. They're investing in space right now, but it's not really been commercialized yet. They're trying to get the equipment into space to do the commercialization. And so, those are the plays that we're talking about right now. That's going to it's going to take time. It's going to take time for the companies to raise the capital and spend the money and get the equipment into space. But, as that happens, the forward outlook will become stronger. That will help reduce volatility and keep the stock prices moving higher. >> I'd love to hear from viewers out there. Are you confident in the long-term success of the space sector? Are you staying away from this sector until you see some some real traction in the profitability and commercialization? I'd love to hear your thoughts in the comments. And if you want to check out some more of the space story, we have plenty of videos on these different stocks from a couple of months ago, but there's still some good information about the long-term case for not just these names, but other names in the space sector, too. You can find that full interview