A massive explosion during a hotfire test at 9pm ET on Thursday has thrown NASA's plans to build a $20 billion lunar base and return humans to the moon into jeopardy. The New Glenn rocket from Jeff Bezos's Blue Origin company exploded during a scheduled test at Launch Complex 36 at Kennedy Space Center, sending a massive fireball into the Florida sky that was visible as far away as Fort Pierce, 185km south. The rocket type was intended for launching landers to the moon for NASA, including landers that would take astronauts to the lunar surface. NASA Administrator Jared Isaacman posted on X that a full evaluation of the timeline would be conducted after the explosion, stating "Spaceflight is unforgiving, and developing new heavy-lift launch capability is extraordinarily difficult." The explosion also raises questions around a platform that was among companies selected just this week by NASA to help jumpstart its lunar base program.
A weeks-long rally in space-related stocks came to an abrupt halt on Friday, with the explosion of a Blue Origin rocket serving as a glaring reminder of the risks that come with the potential riches investors hope to reap from the blossoming industry. 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. AST SpaceMobile, which had surged 83% this year through Thursday, plunged 15% on Friday, while space infrastructure company Redwire Corp. dropped 5.1%. Space launch provider Rocket Lab Corp. fell 3%, and aerospace and defense manufacturer Karman Holdings Inc. declined 13%. A Bank of America basket of US companies that are key players and potential beneficiaries of the space race closed down 2.9% Friday, while the Procure Space ETF (ticker: UFO) dropped 3.7%.
The market reaction was severe across multiple space companies, with AST SpaceMobile plunging as much as 15% before the bell on Friday, marking its most intraday decline since 2024. Space infrastructure company Redwire Corp. dropped as much as 9.3%, while space launch provider Rocket Lab Corp. fell as much as 7.5%. Aerospace and defense manufacturer Karman Holdings Inc. declined as much as 13.4%, and Voyager Technologies Inc. dropped as much as 8.2%. The Procure Space ETF (ticker: UFO) fell 6%, while Intuitive Machines Inc. declined 8.3% and Firefly Aerospace dropped 7%. York Space Systems also declined 5.3% during the selloff. Despite the crash, AST SpaceMobile stock remains up roughly 30% versus the start of this year, highlighting the volatility of space-related stocks. However, the explosion could jeopardize AST SpaceMobile's satellite deployment timeline, with 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.
The latest failure represents a significant financial hit for AST SpaceMobile, with the company expecting the monetary impact to be in the range of $155 million to $160 million, with an asset write-off planned for the second quarter of 2026. However, the company maintains a strong financial position with roughly $3.5 billion in cash and management has recently reiterated its full-year guidance for as much as $200 million in revenue. The manufacturing pipeline remains robust, with BlueBird 8, BlueBird 9, and BlueBird 10 remaining on track for delivery to Cape Canaveral and an expected orbital launch in mid-June on a SpaceX Falcon 9 launch vehicle. BlueBird 11 through BlueBird 33 are in advanced stages of production and assembly, with phased arrays completed through BlueBird 28, reinforcing that the manufacturing pipeline is running well ahead of the launch schedule. Blue Origin is also in contract to place communications satellites for AST SpaceMobile, with Deutsche Bank analyst Bryan Kraft cutting the recommendation on AST SpaceMobile to hold from buy, stating that the incident will cause a meaningful delay in Blue Origin's launch timeline.
The setback extends beyond AST SpaceMobile, affecting multiple companies across the space industry. A Bank of America basket of US companies that are key players and potential beneficiaries of the space race fell as much as 7.7% Friday. The explosion also raises questions around Blue Origin's platform, which was among the companies selected just this week by NASA to help jumpstart its lunar base program. The ripple effects could be substantial, as the issue may be connected to the main propulsion system and the rocket's BE-4 engines, which might have a direct impact on United Launch Alliance's Vulcan rockets, which also use the BE-4 engine for their first stage. The crash highlights the volatile nature of space-related stocks, which are momentum stocks with very high valuations based on future earnings. AST SpaceMobile's network deployment is targeting about 45 BlueBird satellites in orbit during 2026, supported by manufacturing agreements with multiple launch providers including Blue Origin, SpaceX, and others. As Eric Diton, president and managing director at The Wealth Alliance, noted, these space-related shares are momentum stocks prone to big swings, especially when the timeline for potential payoff is pushed back.
