Rocket stocks losing steam as SpaceX IPO sucks up all the oxygen — short the laggards
Space-related stocks that had been soaring are now falling for a second straight day as SpaceX's highly anticipated public listing approaches. At the same time, JPMorgan is warning investors that the riskiest tech names have rallied too far, too fast and it's time to get out.
Idea
Space stocks like Rocket Lab have had an incredible run, but the momentum is cracking just as SpaceX prepares to go public. History shows that when a dominant player in a hot sector IPOs, money rotates out of the smaller competitors and into the new marquee name. With rocket stocks already stumbling for two consecutive days and JPMorgan independently warning that the riskiest tech names are overdue for a pullback, this looks like a classic case where the air is coming out of the balloon. Traders who got in early are taking profits, and there may not be enough new buyers to prop these stocks up in the short term.