2026 has already broken records for investment in the so-called 'space economy' with half a year left to go

Rocket-launch businesses can enable companies like SpaceX or Rocket Lab to pursue more lucrative markets, experts say.

SpaceX has paved the way for the space industry to flourish, and its initial public offering drove investment to new heights.

Space Capital, a venture-capital firm, reported Wednesday that some $31.6 billion had been invested in 129 companies in what it calls the "space economy" in the second quarter of 2026. That includes companies developing space-related infrastructure and those making hardware and software connecting and using space-based assets, as well as ventures that benefit from those assets.

In just six months, 2026 is already a record-breaking year for investment in the sector, according to Space Capital. Both the first and second quarters of 2026 are the top periods ever tracked by the firm, which declared a "new era" for the space economy marked by the SpaceX (SPCX) IPO.

Much of that investment is tied to dozens of infrastructure-related funding rounds. That includes the orbital-data-center startup Cowboy Space's $275 million fundraise and orbital-transfer-vehicle maker Impulse Space's $500 million fundraise.

Prometheus, the Jeff Bezos-backed physical artificial-intelligence startup, raised $12 billion last month in the biggest round tracked by Space Capital for the quarter. It's reportedly pursuing technology for aerospace activities; Bezos' Blue Origin is also raising outside cash to fund its own space business.

Space investing has grown over the last few decades, largely thanks to SpaceX, according to Space Capital's Chad Anderson. The company "made the space economy an investible category," he told MarketWatch, when it began flying the Falcon 9 rocket.

Leading up to SpaceX's record-breaking IPO in June, space stocks surged. But those gains were sharply reversed last month, and losses have continued this month.

After soaring 26.5% in May, the Procure Space exchange-traded fund UFO fell 22.4% in June and has so far shed 9.7% in July, according to FactSet. The Tema Space Innovators ETF NASA has shown comparatively steeper losses of 24% in June and 17% so far in July, per FactSet, after running up 36.7% in May.

Anderson and others chalk the recent selloff to a case of "FOMO," which stands for "fear of missing out." First, that drove investment in public space companies while SpaceX lingered in the private market, then sold those stocks to buy SpaceX's newly minted shares. One expert previously told MarketWatch that space ETFs are feeling an "investment coma" as investors grapple with owning volatile space stocks.

"People wanted access to SpaceX and they couldn't get it, and so they got similar exposure to other companies playing in the space," Anderson said. While there's "a lot of opportunity" with some of those companies, he said, some investors probably sold their shares to buy SpaceX, which has been volatile since its IPO.

On both Monday and Tuesday, SpaceX nearly retreated to its IPO price of $135 a share, which valued the company at more than $1.7 trillion. The stock closed on Tuesday at $136.08 a share, down 32.6% from its June 16 closing price of $201.80.

On Wednesday, the stock bounced 0.7% to get back to the $137 level in premarket trading.

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"There's going to be even more volatility," Anderson said, citing the immense demand around the IPO and interest in SpaceX, the "apex player" in the space economy. Thanks to SpaceX's complicated lockup schedule, a large portion of insider-held shares is set to be released for trading next month.

But if investors can stick it out, they could reap the rewards, analysts say. The average target price for SpaceX stock is $241.80 a share, according to the FactSet consensus, implying about 78% upside to Tuesday's closing price. And some analysts see potential in its rivals as well.

KeyBanc analyst Michael Leshock sees room for Rocket Lab (RKLB) and Firefly Aerospace (FLY) to compete in "niche" markets for rocket launches, according to a note to clients last month. Both companies are currently working on new vehicles.

Rocket Lab has also agreed to buy Iridium Communications (IRDM), its latest acquisition - one it called a "shortcut" to offering space-based applications. It somewhat mimics Amazon's purchase of Globalstar (GSAT) in April, which includes valuable spectrum licenses.

Anderson said his firm expects to see more mergers and acquisitions in this quarter as space companies expand their offerings in search of profits. "Launch alone doesn't make a great business," he said.

Most of SpaceX's revenue comes from its Starlink internet business, which comes from its rockets that send satellites into orbit. SpaceX has also agreed to buy an AI-coding startup to boost its Grok models. It also plans to eventually give its AI offerings a boost with space-based data centers.

-William Gavin

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SpaceX ushered in a 'new era' for investing in space. Why the stock is now cratering.