Why Space ETFs Are Falling Despite SpaceX’s Historic IPO

The highly anticipated public debut of SpaceX was expected to bring fresh excitement to the commercial space industry. Instead, the event has coincided with one of the toughest months for space-focused exchange-traded funds (ETFs) in years.

While SpaceX attracted record-breaking investor demand, many publicly traded space companies struggled with steep share-price declines, dragging the sector lower.

Market analysts now describe the situation as an “investment coma,” where enthusiasm surrounding one company has overshadowed much of the broader industry.

Space ETFs Record Weakest Performance

The Procure Space ETF (NYSEARCA: UFO), the first ETF dedicated entirely to the space industry, has tracked the sector since 2019. The fund is now heading toward its weakest monthly performance since March 2020. As of Wednesday, the ETF had fallen nearly 28% during the month, close to the 28.8% decline recorded at the beginning of the COVID-19 pandemic.

Instagram | @theledger.asia | Space ETFs continued to decline even after SpaceX’s public debut, as investor enthusiasm across the sector weakened.

The fund also posted its eighth consecutive daily decline, marking its longest losing streak since August 22, 2023, according to Dow Jones Market Data.

Before SpaceX’s initial public offering, ProcureAM Chief Executive Officer Andrew Chanin believed the listing would reshape public perception of the space business.

“A company like this coming to the public markets and being essentially a pure-play space company, showing people that, you know, real space companies exist. Maybe we should look at this industry a little bit differently and stop thinking of it as a far-off, futuristic science-fiction hobby for billionaires.”

Many industry observers expected the IPO to attract new investors into the space sector. At the same time, others warned that SpaceX could pull investment away from competing companies, a concern that now appears to be affecting the market.

SpaceX Impact Falls Short on Sector Boost

SpaceX completed one of the largest IPOs in recent history, raising $85.7 billion. The company also announced a $25 billion bond offering, which received exceptionally strong investor demand. Despite those milestones, SpaceX shares have experienced noticeable price swings since listing on the Nasdaq on June 12.

The stock briefly declined to $147.11 per share, slipping below its $150 IPO price, after investors reacted to the company’s latest bond issuance. The transaction is expected to close by Friday.

Meanwhile, SpaceX continues to gain a larger presence across major market indexes. The company has already joined the CRSP Market Indexes, which benchmark nearly $3 trillion in public equities and support numerous mutual funds and ETFs. It is also scheduled for inclusion in the Russell indexes, requiring index-tracking funds to purchase SpaceX shares.

Analysts Describe an “Investment Coma”

Instagram | @tungtatest | The historic SpaceX IPO brought validation to the space industry, but failed to stabilize its volatile market.

Micah Walter-Range, president of space consulting firm Caelus Partners and a contributor to the index behind the UFO ETF, believes investor behavior has shifted dramatically after the IPO.

“All space ETFs are feeling the ‘investment coma’ from the pre-launch fear of missing out on SpaceX to the reality now of owning a very volatile space stock.”

Walter-Range also noted that several competing space ETFs have performed even worse because they hold fewer companies and carry greater exposure to highly volatile stocks.

The Global X Space Tech ETF has dropped 32% during June. The Tuttle Capital Space Industry Income Blast ETF has declined 40%, while the VanEck Space ETF has fallen 35%, according to FactSet.

Major Holdings Continue to Slide

Nearly every leading holding inside the UFO ETF has posted losses throughout June.

Only two companies avoided the broader sell-off: Garmin, the fund’s largest holding specializing in GPS and wearable technology, and SpaceX, which Procure added to its portfolio on June 16 after its public listing. Many other ETFs also added SpaceX shortly after the IPO.

Several prominent space companies experienced even steeper declines. Rocket Lab, one of SpaceX’s launch competitors, has lost about 40% of its value during June. Planet Labs has fallen approximately 50%, while AST SpaceMobile, another SpaceX rival, is down roughly 40% over the same period.

SpaceX’s historic stock market debut has increased visibility for the commercial space industry, but it has also highlighted the sector’s volatility. Record fundraising and strong institutional demand have not translated into gains for most space-related companies.

Instead, investors have concentrated their attention on a single market leader while many established space businesses continue to face heavy selling pressure.

The coming months will likely determine whether confidence broadens across the industry or remains focused almost entirely on SpaceX.