Bad news for investors in space stock BlackSky Technology (BKSY 5.97%) today: Your stock just crashed 17.3% (as of 10:40 a.m. ET).
Good news for investors in BlackSky: There's no particular reason for it.
No bad earnings news from the company, no downgrades from analysts -- not so much as a change in price target to the downside. BlackSky stock just imploded for no particular reason at all.
Then again, that may be the most frightening thing. All across the stock markets, "space stocks" that went public via a special purpose acquisition company (SPAC) initial public offering (IPO) process are plummeting. Down 42% from its nominal pre-IPO price of $10, BlackSky isn't even the worst of these performers. Space-based analytics company Spire Global is down 64%, while other space stocks have suffered more modest declines from their pre-IPO prices:
- Astra Space is down 15%.
- AST SpaceMobile is down 18%.
- Redwire Corporation is down 27%.
- Planet Labs is down 38%.
About the only space SPACs that are holding onto any gains at all these days are Rocket Lab USA and the granddaddy of all space SPACs, Virgin Galactic Holdings -- both still up double digits.
What lesson should investors draw from the disastrous performance of these IPOs? Well, not to put too fine a point on it, but I'd suggest the first and most important lesson is: SPAC IPOs are risky!
Investing in stocks with no history as publicly traded companies, no profits, and little idea when profits will arrive, is not something beginning investors should bet their life savings on. Personally, while I've bought into a handful of space SPAC IPOs myself, I've kept my position sizes tiny -- just big enough to hold my interest and motivate me to keep track of how the nascent space industry is shaping up.
Over time, we'll eventually figure out who the winners and losers of this industry are. In the meantime, don't be surprised if the occasional black hole wanders by and eats your stock.