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Stuck Below SPAC Price, Astra Space Stock Can Still Get Off the Ground

Astra Space (NASDAQ:ASTR) has failed to reach escape velocity. In fact, ASTR stock came back down to earth following a recent underwhelming launch.

Astra Rocket on Alaska launchpad
Source: Astra / John Kraus

Throw in the fact that it came public via a special purpose acquisition company (SPAC) and that space stocks have been slipping, and ASTR stock has been in the wrong place at the wrong time. Still, it’s hardly time to give up on the firm just yet. In fact, Astra has more to support it than some of its rivals.

At the end of August, Astra Space had what could have been a huge moment for the company. It intended to launch one of its rockets with a payload for the U.S. Space Force. A successful flight would have gone a long way in validating the company’s technology to a wider audience.

Unfortunately, things failed to go as the company had planned. One of the engines on the vehicle did not properly engage. As a result, the rocket slid across the launch pad. While it did eventually get liftoff, the rocket failed to generate sufficient power to make its intended voyage.

Traders wasted no time in punishing the company; ASTR stock slipped from $11.50 to $9.50 following the failed attempt.

Not All Is Lost

While the less-than-aimed-for rocket launch captured all the headlines, it’s hardly the only news with Astra. For one thing, its recent SPAC merger deal raised $464 million. That gives the company a lot of flexibility to keep operations rolling even with any potential slowdowns.

The company has also signed new launch deals and is expanding its factory. It’s fun to point at Astra’s recent launch video and criticize the company as not being ready for the primetime. However, it has numerous well-known backers and plenty of financial resources. Don’t let one big miscue shape your whole perception of the firm.

Hardly the Worst Space SPAC

Astra’s problems have certainly come to the forefront over the past month. However, it’s hardly the only space firm with issues.

Indeed, fellow space SPAC Momentus (NASDAQ:MNTS) has already racked up a notable string of disappointments. The firm, which merged with blank check company Stable Road Acquisition, soon shot up to $29 after the deal was announced. Notably, Stable Road originally intended to merge with a firm in the cannabis industry and may have been out of its depth trying to pivot from marijuana to space flight.

In any case, trouble soon hit. Momentus’ founder, Mikhail Kokorich, was a Russian citizen seeking U.S. asylum. Unfortunately for Momentus, the Defense Department raised security concerns about him.

Also, Kokorich greatly overstated Momentus’ previous mission success according to an SEC complaint. Like Trevor Milton at Nikola (NASDAQ:NKLA), Kokorich left Momentus and the firm sharply cut back its guidance and business outlook, while pushing out the timeline for its first commercial launch until summer 2022, whereas it was initially supposed to happen by the end of 2020.

Despite this litany of issues, Momentus continues to trade above $10. The appeal of the space industry is so great that investors are willing to stomach a firm where the founder left in disgrace, the technology is unproven and the pathway to commercial revenue keeps on slipping.

Yet ASTR stock, by contrast, is under the $10 mark. The point of this isn’t to slam Momentus in particular, but rather to show that investors might be overreacting to one unexpected issue at Astra.

ASTR Stock Verdict

It’s been easy to blast Astra for its problems. And it hardly deserves a free pass. However, it was always going to be a bumpy journey to get a successful space company off the ground.

Virgin Galactic (NYSE:SPCE) has had a couple of slowdowns in its journey, such as delayed launches and now its Federal Aviation Administration (FAA) issue. SPCE stock has still worked reasonably for investors well despite these concerns.

Momentus, for another, looks like a total fiasco and yet still trades above its initial $10 SPAC price. So it’s hardly time in throw in the towel on Astra at current levels. This launch incident is a negative development for the firm, but it’s hardly the end of the line.

On the date of publication, Ian Bezek did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Ian Bezek has written more than 1,000 articles for InvestorPlace.com and Seeking Alpha. He also worked as a Junior Analyst for Kerrisdale Capital, a $300 million New York City-based hedge fund. You can reach him on Twitter at @irbezek.


Article printed from InvestorPlace Media, https://investorplace.com/2021/09/stuck-below-spac-price-astra-space-stock-can-still-get-off-the-ground/.

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