Shares of blank-check company Holicity (NASDAQ:HOL) took off this morning after striking a deal with startup Astra to merge and come public at a $2.1 billion valuation. HOL stock was up more than 40% in pre-market trading.
California-based Astra is a startup that makes small rockets to send satellites into orbit. “This transaction takes us a step closer to our mission of improving life on Earth from space by fully funding our plan to provide daily access to low Earth orbit from anywhere on the planet,” said Chris Kemp, founder, chairman and CEO of Astra, in an SEC filing.
Last month, Astra made its initial launch into space with its Rocket 3.2 vehicle launched from Kodiak, Alaska. It will begin delivering customer payloads this summer and initiate monthly launches by the end of this year.
The firm has more than 50 launches booked among about a dozen private and public customers, including NASA and the U.S. Department of Defense. It has booked over $150 million of contracted launch revenue. Astra says its rocket is capable of carrying up to 100 kilograms to low Earth orbit, for a price of $2.5 million for a dedicated launch.
Once the Astra Space SPAC merger is completed, Astra said it will become the first publicly traded space launch company on the Nasdaq Exchange, trading as ASTR stock. The deal is expected to provide Astra with up to $500 million in cash proceeds, including $200 million in a PIPE round led by BlackRock (NYSE:BLK).
HOL Stock Combines Hot SPACs and Space
Holicity raised $275 million when it went public last year as a special purpose acquisition company, or SPAC. SPACS have been around since the 1990s, but they are now surging in popularity. It is cheaper, more efficient, and less risky for companies to go public via a SPAC.
Last week, InvestorPlace analyst Matt McCall wrote in his MoneyWire newsletter that “this type of investment will transform the IPO process.”
“In less than one month (as of Jan. 28), 83 SPACs have gone public. That’s more than 4X last year’s average of 20.7 per month, which broke all records,” he noted.
But it’s not only SPACs that are hot. So is space.
That much was evident in last month’s news that exchange-traded fund (ETF) mega-manager Ark Invest plans to add a Space Exploration ETF to its offerings. The Jan. 14 news sent up shares of Virgin Galactic (NYSE:SPCE) and Maxar Technologies (NYSE:MAXR), which is working with NASA on the new lunar Gateway spacecraft.
The Space Exploration ETF will focus on companies that are “leading, enabling, or benefitting from technologically enabled products and/or services that occur beyond the surface of the Earth,” the SEC filing said.
Great Time for Space Stocks
InvestorPlace analyst Luke Lango recently touted “there has never been a better time to invest in space stocks.”
“Space stocks will breakout in 2021 like EV stocks broke out in 2020. The returns will be enormous,” he wrote. In addition to MAXR and SPCE, his other favorite name in the group is space mobility technology provider Momentus (NASDAQ:SRAC).
On the date of publication, Robert Lakin did not have (either directly or indirectly) any positions in the securities mentioned in this article.
InvestorPlace contributor Robert Lakin is a veteran financial writer and editor, following fintech, agtech and property tech startups.