Satellite Applications Space Economy Space SPACs

The next 6 months may determine if Astra has a future or is relegated to the dustbin of history…

This article will be updated as new information is available.

Last updated July 15, 2022.

Introduction

Astra offers dedicated, low cost launch services for small satellites. In addition to offering launch services, the company aspires to offer: satellite platforms and components; and space services.

Astra currently operates its launches from the Pacific Spaceport Complex in Kodak, Alaska and Cape Canaveral Space Force Station in Cape Canaveral, Florida. They plan to add launch site locations based on its customers' inclination requirements and as they increase the frequency of launches.

The company has plans to design and sell space products based on the customers' needs for a successful satellite launch. Currently they offer two in-space electric propulsion systems.

Future space services are planned to encompass all aspects of hosted satellite and constellation services, including: hosting customer payloads on its spacecraft; and delivering services, such as communications.

The company went public via a SPAC transaction. They debuted as ASTR on NASDAQ on June 30, 2021.

Rocket launch vehicles

Astra's current launch vehicle is Rocket 3.3. It is an expendable, vertically launched, two-stage liquid oxygen and kerosene rocket. The rocket consists of a first stage powered by five electric-pump-fed Delphin engines and an upper stage propelled by a single pressure-fed Aether engine. It has a payload capacity of 50 kg to LEO and 25 kg to SSO. Based on Astra's recent contract with NASA for the TROPICS smallsat launches, Astra charges approximately $2.65 million per dedicated launch.

Astra is working on Rocket 4.0 which is being designed to support a payload capacity of 300 kg to LEO and 200 kg to SSO. Like Rocket 3.3, it is an expendable, vertically launched, two-stage liquid oxygen and kerosene rocket. The first stage of the new rocket is expected to powered by two Firefly Reaver engines that Astra licensed from Firefly in September 2021. There is currently no information available on the second stage engine(s). Rocket 4.0's first test launch is forecast for Q4 2022. Customers will have to pay a “base price” of $3.95 million per dedicated launch.

There's a reason it's called Rocket Science

Astra is learning that space is hard. The company currently faces significant challenges to achieving profitability, including: technology, financial, business model, and legal. The next six months are critical for the company…

Technology challenges

Astra is clearly struggling with their rocket technology. As of June 12, 2022, Astra has only had two successful launches out of a total of ten attempts, which gives them an 80% launch failure rate.

Astra also appears to be suffering from attrition in their technology team; Two key members reportedly left the company in June, their SVP Software Engineering and VP Propulsion.

https://twitter.com/_rykllan/status/1536235145652588544

Financial challenges

The path to achieve cash flow positive is more challenging than Astra originally planned. In 2021, Astra stated that they would be able to achieve cash flow positive in 2024 using $450 million of the $489 million the company received from the SPAC transaction.

Astra investor presentation, February 2, 2021

As of March 31, 2022, the company had $255 million in cash, cash equivalents and marketable securities. Astra is consuming approximately $50 to $64 million per quarter (adjusted EBITDA net losses). The company's 2022 revenue forecast was $47 million based upon 15 launches. However, halfway through 2022 only 3 launches have occurred and 2 of those launches failed. The company will need to raise additional capital before the end of 1Q 2023 (or sooner).

The Company has historically funded its operations primarily by equity financings and convertible promissory notes prior to the Business Combination and subsequently funded its operations through cash proceeds obtained as part of the Business Combination and related private placement. As of March 31, 2022, the Company's existing sources of liquidity included cash and cash equivalents of $161.5 million and marketable securities of $93.7 million. The Company has a limited history of operations and has incurred negative cash flows from operating activities and loss from operations in the past as reflected in the accumulated deficit of $1,494.1 million as of March 31, 2022. The Company expects to continue to incur operating losses due to the investments it intends to make in its business, including the development of its products and services. Management continuously evaluates opportunities to strengthen the Company's financial position, including through the issuance of additional equity securities or by entering into new financing arrangements, as appropriate. However, the Company has adequate liquidity that it expects will be sufficient to fund operating and capital expenditure requirements through at least twelve (12) months from the date of issuance of these financial statements [March 31, 2022].
Astra SEC filing Form 10–Q, 5/5/22

The company's stock price performance is also a challenge. In the 52 week period ending June 30, 2022, the Astra stock price (and company valuation) has dropped precipitously, by 90%, and is expected to fall even lower as a consequence of the failed NASA launch on June 12.

Another financial challenge that Astra may face is being delisted from NASDAQ. A company must maintain a stock price of at least one dollar. It is a distinct possibility that the Astra stock price could continue plummeting past one dollar.

Business challenges

Astra has fundamental business strategy challenges. In December 2021, Kerrisdale Capital published an investment report that called out the following:

Astra is poorly positioned in an increasingly overcrowded market for small launch vehicles.
Astra's business model is not viable. The company relies upon daily launches starting in 2025, which is not substantiated by market demand forecasts.

See the report for additional details.

Legal challenges

Astra faces legal challenges, see this article for additional information Class Action Lawsuit (and other shareholder lawsuits) Filed Against Astra ( $ASTR #AstraSpace ).

The next 6 months

Astra is quickly running out of money. The company's lack of success launching satellites, uncertain path to achieve cash flow positive, uncertain business strategy, combined with the company's plummeting stock price (and associated company valuation) will make raising capital problematic.

Successful launches will propel the stock price up, and can increase investor confidence to join in the next round of fundraising.

Astra has six commercial launches remaining to be scheduled for 2022 to transport satellites for NASA, Planet Labs, Spire, and Spaceflight Inc. The company also has the first flight for Rocket 4.0 announced for 4Q 2022.

Astra will need to deliver a series of successful launches in order avoid the dustbin of history.

With today's failure, $ASTR has an 80% launch failure rate.#Astra has six more launches scheduled this year to transport satellites for NASA, $SPIR, $PL, @SpaceflightInc.

Looking into the future, do you believe Astra will ultimately:
— New Space Economy (@NewSpaceEconomy) June 12, 2022