The Jeff Bezos-backed firm’s New Glenn rocket blew up Thursday evening while undergoing a test on a Florida launchpad, ahead of plans for it to deploy satellites for Amazon.com Inc.’s Leo, a rival network to SpaceX’s Starlink.
The explosion dealt a major setback to Blue Origin’s efforts and will likely lead to delays. It also raises questions around a platform that was among the companies selected just this week by NASA to help jumpstart its lunar base program.
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For investors, the development punctured the hype that has built up around the sector lately, denting enthusiasm that has grown particularly strong in the lead-up to SpaceX’s highly anticipated initial public offering later this year. Blue Origin is also in contract to place communications satellites for AST SpaceMobile Inc., a recent hot stock that tumbled Friday on the news.
“The Blue Origin failure was an unfortunate reminder that the space industry is fraught with risk, and that even minor issues can cause catastrophic failures,” said Steve Sosnick, chief strategist at Interactive Brokers. “Traders and investors have been singularly focused upon the potential rewards of the sector. Being reminded of risk is an untimely splash of cold water on a very hot, if not overheated, sector.”
AST SpaceMobile, which had surged 83% this year through Thursday, plunged as much as 21% on Friday, the most intraday since 2024, while space infrastructure company Redwire Corp. dropped as much as 16%. Space launch provider Rocket Lab Corp. fell as much as 9.4%, and aerospace and defense manufacturer Karman Holdings Inc. declined as much as 13.4%.
A Bank of America Corp. basket of US companies that are key players and potential beneficiaries of the space race fell as much as 7.7% Friday, while the Procure Space ETF (ticker: UFO) dropped some 8%. Additionally, space and defense contractor Voyager Technologies Inc. dropped as much as 12%, while lunar space firm Intuitive Machines Inc. fell 15%.
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The explosion could jeopardise AST SpaceMobile’s satellite deployment timeline, according to Bloomberg Intelligence analyst John Butler, noting that New Glenn is likely to get grounded for an investigation to figure out the cause of the incident.
“A similar mishap with SpaceX’s Starship led to a nearly two-month delay in its scheduled flights last year,” Butler wrote in a note. “The potential for a lengthy delay before the next flight threatens to put AST SpaceMobile behind schedule.”
‘Sell First’
Deutsche Bank analyst Bryan Kraft cut the recommendation on AST SpaceMobile to hold from buy, saying that the incident will cause a meaningful delay in Blue Origin’s launch timeline, and that without Blue Origin, AST SpaceMobile will not be able to meet its launch target for 2026.
Eric Diton, president and managing director at The Wealth Alliance, notes these space-related shares are momentum stocks with very high valuations based on future earnings — and are prone to big swings, especially when the timeline for the potential payoff is pushed back.
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“When a setback like this happens, which could extend the timeline on future launches, and thus extend the timeline on future profitability, many momentum investors will sell first and then ask questions later,” Diton said.
