Rocket Lab (RKLB +0.32%) suffered a big sell-off in Friday's trading despite a bullish backdrop for the broader market. The company's share price closed out the day down 10..8%. For comparison, the S&P 500's level rose 0.5% in the session, and the Nasdaq Composite climbed 0.6%.
Rocket Lab's valuation moved lower today in conjunction with SpaceX's initial public offering (IPO). While Rocket Lab now trades down roughly 32% from its lifetime high, it's still up 275% over the last year.
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Rocket Lab sank as SpaceX soared
SpaceX conducted its hotly anticipated IPO today, and the stock had a strong first day on the market. The new public company's share price climbed 19.2% in the session, bringing its market capitalization to $2.11 trillion.
While SpaceX had a strong, bullish day of trading, most other space stocks actually got hit with big sell-offs. With SpaceX hitting the market, it looks like a substantial number of investors sold stakes in other space companies in order to free up funds to invest in Elon Musk's company upon its public debut.
NASDAQ: RKLB
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What's next for Rocket Lab?
For better or worse, trading for SpaceX will likely continue to have a significant valuation impact on Rocket Lab and other space-tech stocks in the near term. On the other hand, that doesn't mean that Rocket Lab shareholders should be rooting for SpaceX stock to plummet.
News about SpaceX's valuation prior to its IPO actually helped power big gains for Rocket Lab and other space stocks, with investors seeing valuation support for Elon Musk's hugely growth-dependent company as a sign that other space-tech companies also deserved higher valuation multiples.
So while SpaceX's IPO is currently sucking the air out of the room when it comes to valuations across the broader space industry, there are good reasons to think that valuation growth for the company will also wind up being a positive valuation catalyst for other players. Alternatively, a big pullback for SpaceX stock could wind up spurring corresponding valuation contractions rather than causing investment dollars to flow back into other space stocks.
