Is Space Exploration Technologies (NASDAQ: SPCX) stock bad for space stocks? In a year when Rocket Lab (NASDAQ: RKLB) stock more than doubled ahead of the SpaceX IPO, that seems a strange question, but here’s the thing:
SpaceX might be both good and bad for space stocks like Rocket Lab.
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Case in point: This morning, SpaceX announced plans to float (a rumored) $20 billion of debt in what it’s calling its “Inaugural Bond Issuance.” SpaceX stock is down 10.7% through 1:10 p.m. ET on the news, and Rocket Lab is down 7.2%.
SpaceX wants (not needs) a loan
SpaceX raised more than $80 billion in its initial public offering. Post-IPO, SpaceX already has “approximately $100.8 billion in cash and cash equivalents.”
So why is it seeking another $20 billion?
The biggest clue is SpaceX emphasizing the “inaugural” nature of this bond issuance. There’s never been a market for bonds of a publicly traded SpaceX before. Presumably, one thing SpaceX hopes to accomplish is to gauge how popular its bonds are with investors today — how much money it could raise if it needed to, and how much interest it would have to pay.
What this means for Rocket Lab stock
This is why I consider the bond offering neither good nor bad news for SpaceX stock. But for Rocket Lab stock, I fear the SpaceX bond offering might be bad news.
Think about it. SpaceX just held an IPO that sucked $80 billion out of the market for space investors. Now, SpaceX is raising another $20 billion from investors looking to lend money to space stocks.
SpaceX is sucking all the figurative air out of the room. Cash-burning space stocks like Rocket Lab could soon find it harder to raise the money they need.
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