Astra — the FedEx of space — is going public through a merger with Holicity - The Average Joe

Astra — the FedEx of space — is going public through a merger with Holicity

February 4, 2021

Looking to send something to space? Astra, the company looking to become the Fedex of Space, can help with that.

On Feb. 2, Astra announced its plans to go public by merging with SPAC, Holicity ($HOL) — which values Astra at $2.1b.

Space travel heats up

In recent years, a drop in the cost of launching a rocket increased the potential business opportunities in space-related companies — sending companies on a rush to go after what could be the trillion-dollar space economy.

The momentum is now moving over to the public markets…

  • ARK Invest announced plans in Jan. 2021 to launch a space ETF that would invest in space-related companies
  • Virgin Galactic ($SPCE) became the first consumer space travel company to go public in 2018 — up over 300% in the past year.
  • Momentus, a space infrastructure company, announced in Oct 2020 its plans to go public through the SPAC, Stable Road Acquisition ($SRAC).

Cost was one of the biggest factors stopping the growth of space travel — but the cost to launch a satellite into space has fallen from $200m to ~$60m, and it could still drop as low as $5m… Astra is looking to bring this cost even further down…

Astra — send it to space

Incorporated in 2016 and operating in secrecy for years, Astra builds smaller rockets that send satellites and smaller items to space. While companies like SpaceX are building 210 ft tall rockets, Astra focuses on building tiny rockets up to 40 ft tall that will make more frequent trips…

  • Astra — flies daily with a cost of $1m that carries ~450 pounds of cargo.
  • SpaceX — flies ~once/month with a cost of $30-60m+ that carries several thousand pounds of cargo.

In Dec. 2020, Astra’s Rocket 3.2 made it to orbital space on a test flight — becoming the third privately funded US company to reach space, behind SpaceX and RocketLab.

Astra hasn’t made any money but has booked over $150m of launch revenue under contract — with customers including NASA and the Pentagon.

For investors… The universe is the limit

Space investors are undoubtedly making a big bet on the “potential” demand of space travel — which is highly uncertain — but Morgan Stanley believes there are reasons to buy into the industry:

  • 4 factors continue to fuel the space industry: reusable rockets, wireless data demand, access to capital and the demand for space-based military capabilities.
  • Fastest growth to come from satellite internet bandwidth, which could provide internet access to billions in poorer regions of the world.

With no historical financials, investors only have future forecasts to rely on. If actual results turn out lower than expected, these stocks can go down just as fast as they went up. For now, investors can only guess how profitable and big these businesses can become.