Space stocks blasted off earlier this year after Space Exploration Companies (SPCX +6.14%), better known as SpaceX, made its long-awaited public debut in early June. But the rally quickly lost altitude as investors began asking a tougher question: Can the space economy grow fast enough to justify today's valuations and heavy cash burn?
Looking a decade ahead, the space economy is expected to boom. According to McKinsey estimates, the space economy is projected to grow to $1.8 trillion by 2035. McKinsey credits the space economy's rapid growth to plunging launch costs, innovations in hardware technology, and growing investments from both the public and private sectors.
For investors seeking long-term exposure to the expanding space economy, here are two space stocks to scoop up in August.
Image source: Getty Images.
SpaceX has redefined the economics of space launches
SpaceX is a massive player in the space economy. With CEO Elon Musk leading the way, the company has made transformative breakthroughs in space technology. One of its biggest innovations was the invention of reusable first-stage boosters. Prior to SpaceX, these boosters were treated as throwaways, discarded in the ocean after one use. SpaceX has developed technology that lets it land its boosters vertically and reuse them 15-20 times.
Thanks to drastically reduced launch costs, the company has made space more accessible and affordable than ever before. The company has leveraged its rockets to deploy Starlink and operate thousands of satellites in low Earth orbit, providing broadband to millions of customers worldwide. It has also been a key partner to numerous companies in space exploration and satellites, including AST SpaceMobile, Globalstar, Planet Labs, and Intuitive Machines.
NASDAQ: SPCX
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Some of the biggest criticisms of SpaceX right now center on its high cash burn. Based on its recent earnings call on Aug. 4, Piper Sander indicated that capital expenditures would likely be around $65 billion in 2027 -- $17 billion higher than it expected. This cash burn comes as the company works on several megaprojects, including Starship, expanding its Starlink constellation, and exploring the development of orbital data centers from space.
Looking ahead, Elon Musk is targeting $100 billion in total annualized revenue run rate by December 2026. Musk also pulled forward the projections for achieving $1 trillion in revenue to 2030 and noted a "non-zero chance" of hitting that milestone as early as 2029.
The stock is vulnerable to more volatility as the lockup period ends; a sudden flood of new shares hitting the stock market could push the share price down if the market is unable to absorb the volume. That said, SpaceX is a bet on the ongoing growth of the space economy, and with the stock down 49% from its recent peak, I think now is a good time for long-term investors to add shares of the innovative space company.
Rocket Lab is a formidable competitor to SpaceX with its end-to-end space business
SpaceX may be a global leader in launches, but the global space economy is big enough for multiple competitors -- and that's why Rocket Lab (RKLB +1.14%) is another space stock for investors to buy in August. Just as Coca-Cola is a market leader in soft drinks, there's still room for Pepsi and others to carve out their own spot in the industry.
Rocket Lab is establishing itself as Pepsi, capturing the massive market of customers who demand a reliable, neutral alternative to SpaceX. The company's Electron rocket is the second-most-used launch vehicle in the United States today. While its payload pales in comparison to the Falcon 9 (300 kg vs 22,800 kg), its small size enables it to carry small satellites into orbit and place them precisely.
NASDAQ: RKLB
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In addition, the company is leveraging its Electron launch vehicle to win high-value national security contracts through its HASTE (Hypersonic Accelerator Suborbital Test Electron) program. HASTE is a suborbital variant of the Electron rocket, designed to carry heavier payloads of up to 700 kg and provide the U.S. military and defense agencies with high-cadence, cost-effective test flights to expose payloads to hypersonic flight conditions.
On July 27, Rocket Lab announced it was awarded a $266 million contract from the U.S. Space Force for 12 suborbital launches, with up to six additional launches, under the Rocket Systems Launch Program. Sir Peter Beck, founder and CEO of Rocket Lab, noted that "The size and scale of this contract reflects the Space Force's confidence in our ability to meet their urgent national security demands with speed, responsiveness, and scale."
In addition to launches, Rocket Lab has a vast space systems business, where it helps space operators develop and manufacture various components and tools used for satellites, space exploration, and software solutions. The company also announced it would acquire Iridium Communications for $8 billion, giving it a spot in the growing satellite market and complementing SpaceX's Starlink business rather than directly competing with it.
Rocket Lab has emerged as a formidable competitor in the space launch industry and has grown into a vertically integrated, end-to-end space company. With its stock down 51% from its recent high, Rocket Lab is another excellent space stock for long-term investors to scoop up in August.
