After launching the first commercial payload in Earth’s orbit in 2021, Astra Space (NASDAQ: ASTR) Is preparing for a series of launches with NASA in 2022. The company obtained a launch license on June 10, 2022. A tropical mission expected from Cape Canaveral. but, Report It became clear that Astra was unable to send the two hurricane tracking satellites into proper orbit. At a personal level, I’m a fan of space infrastructure companies, even though critics claim that space exploration does not bring direct benefits to investors. Many investors are still Redwire (RDW) It has decreased by more than 50% in the last 6 months.Analyst believe By 2040, the space industry will reach $ 1 trillion in annual sales, and launch costs should be reduced by 95% by then.
In this article, I will explain why I set a hold rating on ASTRA stocks. Astra Space is developing launch services, including extensions to low earth orbit operations, to enable the space services platform model. However, the company has been developing launch features since 2017 and, in my opinion, has been challenging future growth aspects for this long time. In addition, Astra is not yet profitable, but the space services sector expects to generate revenue in two ways. The first is the launch of the customer’s payload and delivery to the desired trajectory. The second way is to provide communication and constellation services via the spacecraft.
Finances that haven’t found a foothold yet
Although its operating history is limited, Astra’s cumulative deficit as of March 31, 2022 was $ 1.494 billion, primarily plagued by negative cash flow and operating losses. By the end of the first quarter of 2022, the company had a cash position of $ 161.5 million and securities of $ 93.7 million. Total cash was $ 255.2 million, a slight improvement over the 2021 announcement of $ 325 million in cash. This position is somewhat better than the first quarter as we already have more than half of the cash accumulated for the full year 2021 and still have three quarters left in that year.
The company’s debt totaled $ 59.8 million in convertible bonds, with no outstanding debt as of the year ending December 31, 2021, compared to $ 71.1 million in 2020. .. The company is optimistic that it has enough liquidity in 10-Q to survive the first quarter of 2023 or March 31, 2023 to 12 months. An additional $ 173.2 million in capital investment. The total amount of cash spent on both investment and investment during the 12 months ending March 31, 2022 was $ 322.2 million. The current cash position is $ 255.2 million, which means that Astra has only nine months left to run out of cash reserves and look for additional capital.
Another way to look at it is that for the three months ended March 31, 2022, the revenue cost was $ 11 million and the operating loss was $ 70.8 million. This revenue cost includes a launch service cost of $ 5.5 million for LV0008 and LV0009 and a write-down of $ 5.5 million for inventory related to LV0010 through LV0014. This negative financial background resulted in a net loss of $ 50.1 million, slightly above the guidance range of $ 47.5 million.
Undoubtedly, Astra expects the 2022 calendar year to be an era of transformation supported by an expanded product roadmap and increased production. The main question in the minds of all investors is whether the rocket launch technology is stable and reliable, and whether the company minimizes the risk of failure. Astra’s CEO reiterates his company’s position to accelerate launches by 2022. The company is in the process of not only increasing the production rate of the launch, but also increasing the number of launch ports to minimize costs and overall spending.
In retrospect, ballistic spacecraft clients rarely choose from anything other than Astra Space. Blue Origin (BORGN) New Shepard and Virgin Galactic (SPCE) SpaceShipTwo present a formidable case to consider.
Returning to NASA’s contract, Astra is expected to launch the first two of six small “time-resolved observations of precipitation structure and storm intensity by constellations of small satellites” (TROPICS) through rocket 3.3. I did. The spacecraft was scheduled to study the formation and development of tropical cyclones almost every hour. This is about 4 to 6 times more than is possible with current satellites. The second stage of this low cost booster malfunctioned, meaning that Astra was unable to bring the payload into orbit. This was the seventh launch of Astra’s small or low-cost booster, and the fifth failure reported by the company. Astra planned three launches (out of six small CubeSats) for NASA, two at a time, on three orbital planes.
Investors should be aware that the loss of the first two TROPICS satellites will not have a final impact on Astra’s mission. According to NASA details, only four of the six satellites, or two of the three launches from Astra, need to function to meet the mission’s success criteria. NASA is trading more with Astra than other competitors such as SpaceX. The amount charged for one launch and paid for a series of launches. In this case it is 3. In my view, Astra is working to adapt to NASA’s economy while carrying out new capacity missions.
Apart from accessibility to space, Astra’s mission is to provide scientists with a low-cost alternative to sending NASA science into space. The Rocket 3 Series is said to generate an average of about $ 2 million in revenue. Looking at the unit’s economics, we can see that 25% of the gross profit received had material rights.
Astra won a NASA contract in 2021, bringing the TROPICS mission contract to $ 7.95 million. At the end of 2021, Astra announced that it had signed a customer contract for the contract revenue of the launch service. This is equivalent to about 50 launches expected to occur by 2025.
Launch System 2.0 includes the new Rocket 4.0, an improved version of Rocket 3.3. According to Astra CEO Chris Kemp, the company is making factory investments, including infrastructure upgrades that will shift production to a weekly rate instead of the current monthly rate. The higher launch rates associated with Launch System 2.0 help meet spatial demands and allow companies to fix issues related to rocket 3.3 launch failures. The Astra roadmap also includes the launches of LV10, 11, and 12 all scheduled for 2022.
Astra predicts that adjusted EBITDA will decrease further from $ 58 million to $ 64 million in the second quarter of 2022. In addition, the number of issued shares is expected to increase from 267 million shares to 270 million shares by December 2022. This increase could further dilute stocks. Astra increased the total number of issued shares by 170.75% from March 2021 (95.4 million shares) to September 2021 (258.3 million shares).
Astra’s mission is to provide a low-cost alternative for scientists to send NASA science into space and bring payloads into orbit. As of June 12, 202, the company has not yet reached the break-even point, despite investors looking to further disillusionment, as the first two of the six NASA payloads were not on track. Hmm. System 2.0 and Locker 4.0 provide a faster and better alternative. Astra’s roadmap also includes launches such as LV10, 11, 12 all scheduled for 2022. We also plan to raise more funding by the first quarter of 2023. For these reasons, we recommend a stock hold rating.