To The Moon

The recent divergence between $Rocket Lab USA, Inc.(RKLB)$ and $AST SpaceMobile, Inc.(ASTS)$ highlights a shift in investor sentiment from "speculative hype" to "fundamental execution." While both operate in the space sector, their underlying business models are currently moving in opposite directions based on their May 2026 earnings results.

The Nature of the Divergence

The divergence is primarily driven by revenue reliability versus execution risk:

Buying Opportunities in a Divergent Sector

This divergence does create opportunities, but they require distinct tactical approaches:

1. The "Fundamental Anchor" Play (RKLB)

Rocket Lab is increasingly viewed as the "diversified" space play. With high-margin Space Systems (parts and software) now contributing more to revenue than its launch services, it is moving toward a more predictable SaaS-like or industrial business model.

• Opportunity: Investors may see RKLB as a lower-risk way to gain exposure to the sector's growth, particularly with a looming SpaceX IPO (reportedly targeting June 2026) likely to re-rate the entire sector's valuation.

2. The "Distressed Tech" Play (ASTS)

The plunge in ASTS is largely due to the April 2026 launch failure on New Glenn, which delayed their revenue ramp-up. However, the fundamental thesis—direct-to-cell satellite connectivity—remains intact with major partners like AT&T and Verizon.

• Opportunity: For high-risk investors, the current sell-off might be a "buy the dip" moment, provided you believe in their ability to meet the updated 45-satellite target by year-end.

How to Invest in Both: Tactical Strategies

For investors looking to capture the upside of the sector while managing the volatility of these two specific names, consider these three approaches:

A. Use a "Core-Satellite" Positioning

• The Strategy: Treat RKLB as your "Core" space holding (e.g., 70% of your space allocation) due to its revenue and defense moat. Use ASTS as a "Satellite" holding (30%) for high-alpha potential.

• Execution: This balances the stability of Rocket Lab's $2.2B backlog against the high-reward "binary" outcome of ASTS's satellite network.

B. Options Strategies for Divergence

Given your experience with options, you can use the volatility to your advantage:

• For RKLB: Consider a Bull Put Spread. With RKLB hitting all-time highs, selling puts below key support (around $87) allows you to collect premium while betting on the upward momentum continuing into the SpaceX IPO window.

• For ASTS: Given the high Implied Volatility (112%+), a Long Straddle or Long Strangle might be too expensive. Instead, look at Leaps (Long-term Equity Anticipation Securities) for 2027 to give the company time to recover from the April launch setback without the pressure of short-term theta decay.

C. The Basket Approach (ETF)

If the individual stock volatility is too high, you can invest in both via the Procure Space ETF (UFO).

• Benefit: This provides exposure to RKLB and ASTS while diluting the impact of a single mission failure (like the New Glenn incident) with other space-adjacent firms like Intuitive Machines (LUNR).

Pro-Tip: Watch for the SpaceX S-1 filing. Market analysts expect that once SpaceX's real margins are public, the market will "re-price" RKLB and ASTS based on how closely they track SpaceX's Starlink and Launch economics.

Given the recent explosive 40% surge in Rocket Lab (RKLB) following its Q1 2026 earnings beat, the stock is currently in a "price discovery" phase at all-time highs. For a Bull Put Spread, the goal is to identify levels where the stock is likely to find a floor during a natural retracement.

Based on technical data as of May 13, 2026, here is the breakdown for your trade setup:

1. Key Technical Levels

• Current Price: ~$114.00 – $117.00

• Primary Resistance: $123.94 (The recent all-time high). The stock saw some selling pressure here on Tuesday as traders took profits.

• Immediate Support (The "Aggressive" Floor): $112.00. This was a major analyst price target (Guilfoyle) that acted as a breakout point. If the stock holds this level, the momentum remains parabolic.

• Secondary Support (The "Gap Fill" Floor): $95.00 – $98.00. There is a massive price gap from the earnings surge. Markets often like to "fill the gap." This area aligns with the previous 52-week high and several updated analyst price targets (Needham, Citizens JMP).

• Major Structural Support: $84.42. This is the 20-day SMA. A drop to this level would represent a healthy 25% correction from the highs but would keep the long-term uptrend intact.

2. Bull Put Spread Strategy (RKLB)

Since the RSI is currently overbought (73.68), selling puts too close to the current price ($110+) carries high "gamma risk" if the stock mean-reverts.

Option A: The High-Probability "Safety" Setup

• Sell (Short) Put Strike: $95

• Buy (Long) Put Strike: $90

• Logic: You are placing your "floor" at the top of the pre-earnings consolidation zone. Even if the stock pulls back significantly to fill the earnings gap, it is technically likely to find strong buying interest at $95.

• Risk/Reward: Lower credit received, but a very high probability of expiring worthless (OTM).

Option B: The "Aggressive Momentum" Setup

• Sell (Short) Put Strike: $105

• Buy (Long) Put Strike: $100

• Logic: This bets that the "new era" of RKLB valuation will stay above triple digits. You are protected by the psychological support of $100.

• Risk/Reward: Higher credit, but more susceptible to a 10-15% "cooling off" period which is common after a 40% weekly move.

3. Strategic Considerations

Final Tactical Note:

Watch the SpaceX IPO headlines (rumored for June). Any positive news regarding SpaceX's valuation will likely provide a "sympathy lift" to RKLB, potentially preventing it from ever falling back to fill the $95 gap.

Wait for a Red Day: If you haven't entered yet, wait for a 2-3% "red day" to sell your puts. This allows you to capture higher IV and gives you a better entry point for the spread.

Summary

The recent performance of Rocket Lab (RKLB) and AST SpaceMobile (ASTS) following their May 2026 earnings reports illustrates a clear "Space Sector Divergence." This split reflects a transition from speculative hype to a market that rewards tangible execution and defense-linked revenue.

The Sector Divergence

• Rocket Lab (RKLB) Surges: RKLB skyrocketed (+30%+) after reporting record Q1 2026 revenue of $200.3M (up 63% YoY) and a massive backlog of $2.2B. The surge was fueled by its role in the U.S. "Golden Dome" missile defense plan and the announcement of its largest launch contract to date. It is now viewed as a "de-risked" infrastructure play.

• AST SpaceMobile (ASTS) Plunges: Conversely, ASTS shares fell sharply. Despite a major regulatory win with FCC approval for direct-to-device service, the company was hit by an April 2026 launch failure on a Blue Origin vehicle. This setback delayed the deployment of its "BlueBird" constellation, pushing projected revenue further into the future and highlighting the high execution risk inherent in pre-operational satellite networks.

Buying Opportunities

This divergence creates a "Two-Speed" entry point for investors:

1. Value in Infrastructure: RKLB acts as a "picks and shovels" play. For those looking for a stable entry into the sector, RKLB offers a proven launch cadence and a diversified Space Systems division that behaves like a high-growth industrial stock.

2. Speculative Opportunity: The ASTS plunge offers a high-risk, high-reward "buy the dip" scenario. If the company hits its revised target of 45+ satellites by year-end, the current price may be an attractive entry before commercial service with AT&T/Verizon begins.

How to Invest in Both

To capture the upside while managing risk, investors can use a Core-Satellite approach:

• The Mix: Allocate a larger portion (e.g., 70%) to RKLB to anchor the portfolio with real earnings and defense contracts. Use the remaining 30% for ASTS to capture the explosive potential of global cellular connectivity.

• Options Strategy: Sell Bull Put Spreads on RKLB (targeting support near $95–$98) to generate income from its upward momentum. For ASTS, consider long-term LEAPS to avoid short-term volatility from launch delays while betting on 2027 profitability.

• The Basket Method: Use the Procure Space ETF (UFO), which holds both names, to gain exposure to the broader space economy and the upcoming SpaceX IPO (expected June 2026).

Appreciate if you could share your thoughts in the comment section whether you think RKLB option play could be a good way to capture a divergence in the space sector.

@TigerStars @Daily_Discussion @Tiger_Earnings @TigerWire @MillionaireTiger appreciate if you could feature this article so that fellow tiger would benefit from my investing and trading thoughts.

Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.