A SpaceX 'investment coma' is driving this major space ETF toward its worst month in 6 years

By William Gavin

Investors are seeing 'the reality now of owning a very volatile space stock'

SpaceX went public less than two weeks ago.

The first pure-play exchange-traded fund focused on space is about to have its worst month since in six years, despite what some thought would amount to heightened interest in the industry around SpaceX's initial public offering.

The Procure Space ETF UFO has tracked the space sector since 2019. In May, a few weeks before SpaceX's (SPCX) IPO, ProcureAM CEO Andrew Chanin spoke favorably of what SpaceX could mean for public consciousness around the business of space.

"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," Chanin told MarketWatch. "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."

Other experts also predicted that the IPO could bring positive attention to the industry and spur greater investment. At the same time, however, others warned that SpaceX could suck investors away from other companies in the sector.

SpaceX's IPO was a historic success, raising $85.7 billion. This week, the company also priced a $25 billion bond offering after seeing outsized demand from investors. But SpaceX and other space stocks have been volatile recently.

The UFO ETF on Wednesday logged its eighth straight session of declines, for its longest losing streak since Aug. 22, 2023, according to Dow Jones Market Data. Additionally, the ETF's roughly 28% month-to-date decline is putting it on pace for its worst monthly performance since March 2020, when it fell 28.8% as the COVID-19 pandemic began.

"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," Micah Walter-Range, president of space-consulting firm Caelus Partners and contributor to the index behind UFO, said in a statement.

He said that "most of the space-focused ETFs in the market are down further than UFO over the past month, because they are concentrated around a smaller number of more volatile space stocks."

The Global X Space Tech ETF ORBX is down 32% in June, according to FactSet data. The Tuttle Capital Space Industry Income Blast SPCI and VanEck Space WARP ETFs are down 40% and 35% month to date, respectively, according to FactSet.

So far, all but two of the UFO ETF's top 10 holdings have seen their stock prices decline in June. The outliers are its biggest holding, GPS and wearable-technology company Garmin (GRMN), and SpaceX, which Procure added to its portfolio on June 16. It joined the ranks of many other ETFs that have added SpaceX to their holdings since its IPO.

Shares of SpaceX rocket-launch rival Rocket Lab (RKLB) are down about 40% in June, while Planet Labs shares (PL) have shed roughly 50% of their value. Shares of AST SpaceMobile (ASTS), another SpaceX rival, are down about 40% this month.

As for SpaceX, the company's stock action has been choppy since it landed on the Nasdaq on June 12. SpaceX shares briefly dipped as low as $147.11 a share this week, below the $150-a-share debut price, as investors reacted to the company's plans to offer new bonds. That sale is expected to be completed by Friday.

Adding to the volatility, SpaceX has officially been added to the CRSP Market Indexes, which benchmark $3 trillion in public equities and underpin a number of popular mutual funds and ETFs. The company is expected to be added to Russell indexes on Friday as well, which will force funds tracking those indexes to add SpaceX to their holdings.

Don't miss: Everyday investors fueled the SpaceX trading frenzy. Now they face a bear market.

-William Gavin

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06-24-26 1604ET