If I Could Only Buy 1 Space Stock for the Next Decade, It Wouldn't Be SpaceX or Rocket Lab
2026-10-03 06:05
•Brett Schafer •The Motley Fool
•• ••• Axe Cap view
Why Planet Labs Beats SpaceX and Rocket Lab for Long-Term Investors
Though household names in space, SpaceX and Rocket Lab’s sky-high valuations make Planet Labs a smarter bet over the next decade.
Space stocks often grab headlines with their striking ambitions, but most trade at valuations that demand near-perfect execution. SpaceX and Rocket Lab, for example, sport price-to-sales ratios (P/S) of 96 and 55, respectively. That’s a tall order to justify given both burn cash steadily without free cash flow. Planet Labs presents a refreshing contrast: it trades at a more reasonable P/S near 15, boasts 58% annual revenue growth, and generates positive free cash flow with a healthy 57% gross margin. This isn’t just a cheaper stock; it has a tangible revenue model anchored by solid government contracts surviving the cyclical uncertainties many space ventures face. South African investors should watch USD/ZAR closely—if the rand weakens, dollar-based space stocks become costlier. Given our local market’s caution on cash-burning tech, Planet Labs aligns better with prudent risk-reward. Still, should satellite imaging face technological disruption or contract setbacks, valuations could quickly chill. this is just our opinion and not financial advice
Trim exposure to highly valued growth plays like SpaceX and Rocket Lab if you hold them, and shift into Planet Labs for a more balanced, revenue-backed space investment. Keep a close eye on USD/ZAR moves as currency shifts materially impact returns.
- PL
- USD/ZAR
- Satellite imaging technology disruption
- Unexpected government contract cancellations or delays
6/10
The article argues that while SpaceX and Rocket Lab are popular space stocks, they trade at extremely high valuations (P/S ratios of 96 and 55 respectively) and are cash flow negative. Planet Labs offers better value as a space economy investment, with a lower P/S ratio of 14.6, strong revenue growth (58% YoY), positive free cash flow, and high gross margins (57%), making it a more attractive long-term opportunity.
Our take is based on reporting first published by The Motley Fool.