One of Blue Origin's rockets blew up late Thursday, bursting into an enormous ball of flames in a major setback for Jeff Bezos' space company.

The incident could also puncture the space stocks bubble, judging by how investors were reacting ahead of Friday's opening bell.

AST SpaceMobile shares slumped more than 13% and Rocket Lab slid over 5% in premarket trading. Both have rallied by nearly 90% over the past month as hype builds in the run-up to SpaceX's initial public offering.

The failed launch by a competitor could bode well for the IPO, which could raise more than $75 billion. But it may also have given investors a good excuse to lock in some profit following the spell of heady gains for AST and Rocket Lab.

The selloff came after a Blue Origin New Glenn rocket exploded on its launchpad in Cape Canaveral, Fla., sending a ball of fire into the sky.

Bezos said in a post on X that all personnel were accounted for and safe.

"It's too early to know the root cause but we're already working to find it," the founder of Amazon.com added. "Very rough day, but we'll rebuild whatever needs rebuilding and get back to flying. It's worth it."