ASTS, RKLB, SPCE, RDW Stocks Extend Selloff Overnight — Analyst Backs ‘Betting Against Space’ Trade As Jefferies Courts SpaceX Bears

• SpaceX plans to raise $75 billion at $135 per share, valuing the company at $1.77 trillion, or more than $1.8 trillion on a fully diluted basis.

• Tesla influencer AleXandra Merz said that the IPO is only one step in SpaceX’s funding journey, citing estimates of $235 billion in capital needs through 2030.

• Satellite communications analyst Tim Farrar revived the view that ‘betting against space’ has often been the more rational trade.

Space stocks extended their selloff overnight heading into Wednesday as investors weighed growing bearish interest around SpaceX’s blockbuster IPO and mounting questions over its $1.8 trillion valuation.

The weakness followed a brutal Wednesday session that saw shares of AST SpaceMobile (ASTS), Rocket Lab (RKLB), Virgin Galactic (SPCE) and Redwire (RDW), among other space stocks, all plunge up to 15%. In overnight trading, ASTS and RKLB each fell about 2%, RDW declined 3%, and SPCE sank 6%.

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How Big Can SpaceX’s IPO Get?

According to SpaceX’s filing with the U.S. Securities and Exchange Commission (SEC) late Wednesday, the company plans to sell 555.6 million shares at $135 per share, raising $75 billion and valuing the company at $1.77 trillion. On a fully diluted basis, the valuation exceeds $1.8 trillion. The company is expected to begin formally marketing the deal on Thursday ahead of a June 11 share sale and a trading debut the next day.

The scale of the offering could grow further if investor demand proves strong. Tesla influencer Sawyer Merritt noted on X that full exercise of the IPO’s overallotment option could increase the value of shares sold by $11.25 billion. “If demand for SpaceX stock is strong enough with this IPO, the company says it could raise upwards of $85.7 billion,” Merritt said.

The initial IPO filing had ignited a brief rally among space stocks after SpaceX called the sector’s opportunity as the “largest actionable total addressable market in human history,” estimating a $28.5 trillion market spanning launch services, Starlink connectivity, direct-to-cell communications and AI infrastructure.

Why SpaceX May Need More Capital

While much of the market has focused on SpaceX’s valuation, Tesla influencer AleXandra Merz, who posts under the handle TeslaBoomerMama on X, said that the $75 billion to $83 billion raise would provide financial flexibility, but added that SpaceX’s plans for Starlink expansion, Starship development and AI infrastructure point to funding needs that extend far beyond a single capital raise.

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Merz noted that SpaceX already carries debt estimated at $29 billion and highlighted estimates circulating among investors that place the company’s capital requirements at $235 billion through 2030: “This is normal for a company still in heavy build mode,” she wrote. “It just means the IPO is an important milestone, not the end of the funding journey.”

Merz also flagged a larger retail allocation than is typical for a major IPO. However, she cautioned that participation would still depend on brokerage relationships, allocation availability, account minimums and confirmation requirements. She said: “Many will likely be disappointed with their actual allotment on June 12 — just putting that out there to help manage expectations.”

SpaceX Bears Circle The IPO

While Wall Street’s biggest banks secured roles on the IPO, one notable name was missing from the underwriting syndicate: Jefferies Financial Group. According to Bloomberg, hedge funds interested in betting against SpaceX after its public debut have approached Jefferies to explore potential short-selling opportunities. Jefferies’ absence from the underwriting group has reportedly left the firm uniquely positioned to facilitate bearish trades once shares begin trading.

The discussion around potential short bets prompted satellite communications analyst Tim Farrar to revive a bear thesis: “‘Betting against space’ has often been the most rational approach until the last few years,” Farrar said on X.

“Why do you think Musk wanted to have ‘the first constellation not to go bankrupt’?” Farrar said, referencing a 2021 X post in which Musk acknowledged the financial risks facing Starlink. “SpaceX needs to pass through a deep chasm of negative cash flow over the next year or so to make Starlink financially viable,” Musk said at the time. “Every new satellite constellation in history has gone bankrupt. We hope to be the first that does not.”

Warning On SpaceX Valuation

Short seller Jim Chanos, the founder of Kynikos Associates who gained prominence after predicting Enron’s collapse, dismissed on X the comparisons between SpaceX and Amazon’s early years.

He noted that Amazon was valued at $19 billion at the end of 2005, or about 2x revenue and 30x trailing earnings before interest, taxes, depreciation and amortization (EBITDA), arguing that investors were assigning little value to its future businesses. “SpaceX’s expected valuation is literally the opposite of that situation,” Chanos said.

How Do Retail Traders Feel About Space Stocks?

On Stocktwits, retail sentiment toward SpaceX, ASTS and RDW was ‘bullish’, with ‘extremely high’ message volume for SpaceX and ‘high’ for ASTS and RDW. RKLB also carried a ‘bullish’ sentiment rating, though message volume was ‘normal’. SPCE stood out with ‘extremely bullish’ sentiment and ‘extremely high’ message volume.

Over the past year, ASTS has surged 328%, RKLB has jumped 329%, RDW has gained 25%, and SPCE has advanced 32%.

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Deepti Sri has no position in any of the stocks mentioned in this article. StockTwits’ news team content is for informational purposes only and is not intended as investment advice. For more, see our editorial policy. This article was originally published on StockTwits.

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