3 Sorry Space Stocks to Sell Now While You Still Can: Summer Edition


  • Investors might want to avoid these space stocks to sell with the industry’s risks outweighing its potential rewards for now.
  • Virgin Galactic (SPCE): Facing severe financial instability, the firm has lost nearly a billion dollars in recent years with significant delays in developing its next-generation spacecraft.
  • ARK Space Exploration & Innovation ETF (ARKX): ARKX’s high volatility and significant underperformance highlight the speculative nature of this investment.
  • Boeing (BA): Boeing will need more than a decade to fulfill current orders, reflecting substantial operational challenges.
Space Stocks to Sell - 3 Sorry Space Stocks to Sell Now While You Still Can: Summer Edition

Source: Dima Zel / Shutterstock.com

Perhaps the most dominant narrative in stock market circles is the Federal Reserve’s potential moves to slash interest rates. However, recent comments from Fed officials suggest that we may have higher-for-longer interest rates, ruling out multiple cuts this year. Additionally, investors are digesting the Commerce Department’s revised, weaker-than-expected Q1 U.S. economic growth figures. With these variables in play, it might be the right time to consider offloading space stocks to sell.

The space economy has incredible potential, and the proliferation of AI and quantum computing will be a key driver for the sector. Moreover, it’s also true that the U.S. stock markets have shown tremendous resolve despite operating in a choppy macroeconomic landscape. However,  given the uncertainty, it’s best to be circumspect and avoid wagering on high-risk space stocks.

Virgin Galactic (SPCE)

A photo of the silver Virgin galactic plane.

Virgin Galactic (NYSE:SPCE) plans to revolutionize the space tourism experience, yet its alarming financial situation poses some serious questions. SPCE was one of the hottest investments during the pandemic years, soaring to an all-time high of $62.80. However, it is now a shadow of its former self, crashing to just 91 cents per share.

It has lost close to a billion dollars in the past couple of years alone, and with $867 million in cash, it has an estimated runway of just two years. Moreover, given its recent results, it’s unlikely to achieve a cash flow-positive status until 2026.

Also, the development of its next-generation spacecraft faces major delays, and the current fleet will need to substantially increase flight frequency to meet its goals. Compounding these financial woes is its legal battle with Boeing over unpaid invoices amounting to $26.4 million, further impacting its financial stability.

ARK Space Exploration & Innovation ETF (ARKX)

Visualization of the communication network around Earth. LUNR stock
Source: Blue Planet Studio/Shutterstock

Investing in the space industry is incredibly risky, so most investors want to consider exposure to ARK Space Exploration & Innovation ETF (CBOE:ARKX). Led by the disruptive Cathie Wood, the companies ARKX invests in could potentially revolutionize aerospace, satellites, and other space-related fields. However, hopping on the ETF bandwagon just for the heck of it makes no sense.

If we analyze ARKX stock’s price performance, we see a substantial 27% dip in the past three years, compared to the median of all ETFs at positive 7%. Moreover, despite the stock market bull run last year, ARKX stock gained just 6.8% compared to the S&P 500’s 24% gain. Additionally, its annualized volatility of 20% and its expense ratio of 0.75% are roughly 54% and 56% higher than the median of all ETFs, respectively.  

Hence, given the volatility in the market at this point, it’s tough to feel excited about a speculative investment such as ARKX stock.

Boeing (BA)

BA stock: a blue and white Boeing 787 flying in the sky above the clouds
Source: vaalaa / Shutterstock

Boeing (NYSE:BA) is navigating multiple headwinds as persistent safety concerns continue weighing down its commercial aircraft segment. Though its management is squarely focused on restoring its reputation, the journey toward recovery appears daunting.

Financially, the firm’s situation is equally grim. It posted $16.6 billion in sales, representing a 7.5% drop on a year-over-year (YOY) basis, while missing estimates by $620 million. Moreover, its net income is firmly in the negative, at -2.81%. This troubling financial performance underscores deeper issues, where its management continues prioritizing shareholder rewards over critical R&D in aerospace engineering.

Additionally, its massive plane delivery backlog stands at a whopping $448 billion, which analysts predict would take roughly 11 years to clear out at current production rates. Moreover, Boeing’s Starliner, its much-awaited debut into crewed space missions, hit a snag with a last-minute scrap of its launch, now rescheduled by NASA.

On the date of publication, Muslim Farooque did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines

Muslim Farooque is a keen investor and an optimist at heart. A life-long gamer and tech enthusiast, he has a particular affinity for analyzing technology stocks. Muslim holds a bachelor’s of science degree in applied accounting from Oxford Brookes University.

Article printed from InvestorPlace Media, https://investorplace.com/2024/06/3-sorry-space-stocks-to-sell-now-while-you-still-can-summer-edition/.

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