The technical Wall Street term for investors short selling space stocks right now is “getting your face ripped off.”

Shares of commercial space companies were on fire coming into Wednesday trading. Over the past month, shares of Rocket Lab and AST SpaceMobile—to name two—are up 74% and 55%, respectively, leaving them both up more than 380% over the past 12 months.

The gains carried into Wednesday. Rocket Lab stock gained 4.9%, while the S&P 500 finished just in the green. AST stock rose 8.3%.

There are a few reasons for the rise. For starters, there is the SpaceX IPO. Elon Musk’s rocket company is on the cusp of a record-setting public offering that could value the company at $2 trillion, or 80 times estimated 2026 sales.

SpaceX has essentially created the modern space economy, showing what lower costs to reach orbit can enable, such as its profitable space-based broadband product, Starlink. Its growth and valuation certainly aren’t hurting the case of any of the smaller space stocks that are benefiting from the SpaceX halo.

Beyond SpaceX, there is more activity above the clouds. On Tuesday, NASA detailed its plans to build a permanent American presence on the moon, which included business awards for several companies, including Blue Origin and Firefly Aerospace.

(Firefly stock was up more than 6% in premarket trading, despite announcing a stock sale on Tuesday evening, taking advantage of recent stock gains to raise needed capital. Shares ended Wednesday down 2.6%.)

Another factor in the recent rise is short selling. Bearish investors can borrow shares they don’t own and sell them, betting that they can be repurchased at a later date for a lower price. Many commercial space stocks are heavily shorted. Almost 20% of AST’s shares available for trading have been sold short. That number for Rocket Lab and Firefly is about 7% and 9%, respectively. The average short interest ratio for stocks in the Russell 1000 is closer to 5%.

Short selling is a way to profit from stocks going down, but it also carries the risk of a short squeeze, in which a rally feeds on itself as bearish investors, with losses growing, rush to buy stock.

Whatever the reasons, space stocks are melting up in a scenario that might remind investors of EVs circa 2020 and 2021. Stocks such as Nikola and Rivian Automotive were briefly worth more than traditional auto makers such as General Motors and Ford Motor.

The success of another Musk company, Tesla, drove that activity.

The EV bubble has essentially ended. Nikola declared bankruptcy in 2025. Rivian stock is down more than 90% from all-time highs reached in late 2021.

The air came out of the EV valuations long before sales growth slowed dramatically, forcing GM and Ford to write off billions of EV investments. Peak EV euphoria might have been late 2021, when Tesla stock first crossed the $400 mark.

That was also right around the time of the Rivian IPO. The SpaceX IPO might mark the peak of space stock valuation euphoria. In that case, investors have a few weeks to think about what to do next.

The space business, like EVs, is here to stay, but valuations approaching 80 times estimated sales are a red flag for investors.