If at first you don’t succeed, you need to try and try again. It seems as though Astra’s (NASDAQ:ASTR) management has taken that lesson to heart. As I detailed in my last article on Astra, the company’s first attempt did not go so smoothly.
The LV0006 craft had its flight terminated after just 2.5 minutes off the ground. The failure was caused after one of the engines was compromised. This resulted in a scary-looking sideways slide that the rocket never recovered from.
There were tons of memes in investment Twitter (NYSE:TWTR) on the Astra rocket power slide. Less amusing was the drubbing ASTR stock got in the market soon after. The stock traded as low as $8.45 in October. I mentioned though in my article that I believed this was temporary. ASTR stock has recovered fairly well since then.
Astra’s Management Learns from Failure
Management has analyzed the factors that caused the situation with LV0006. They are confident that they have identified the issues and have a plan to move forward. There was a leakage from the rocket’s propellant supply system. The leaked ingredients ignited, causing one of the engines to stall.
According to the company’s press release, they are implementing the following design changes to its next craft, the LV0007. To quote from the press release, the changes are:
- The propellant supply system was reconfigured to reposition the fuel supply and liquid oxygen supply so that even if both were to leak again, they would not mix.
- The propellant supply mechanism was modified and requalified to reduce the risk of leaks in the future.
- Verification procedures have been improved for design and operational processes.
The LV0007 is issued on the behalf of the U.S. Space Force’s and will carry a test payload for mission STP-27AD2. I am not a rocket scientist by any means. However even I know that designing something this complex is an iterative process. It is a testament to management’s openness that they have addressed this issue head-on.
I don’t expect future launches from here on out to be perfect. In fact, it is to be expected that there will be setbacks along the way. But I like the “launch and learn philosophy” described by CEO Chris Kemp. I believe that this is the right attitude to have and investors should have patience for the long-term.
ASTR Stock Could Rally Soon
Looking forward, Astra is aiming to launch the LV0007 in the very near future. It seems the company has missed its two launch windows of Oct. 27 to Oct. 31 and Nov. 5 to Nov. 12. Management has indicated though that it plans to launch very soon and is subject to ideal launch conditions.
I consider the move from the low of $8.45 a “mini-uptrend.” Therefore in my view, ASTR stock recently had a strong candle breakout to $10.60. The key level to watch is the stock’s 200-day moving average of $11.20. Since the stock is still trading below this key level, I expect a lot of volatility in the near future.
A successful launch of the LV0007 could provide the catalyst for a large pushup. A breakout of the 200-day moving average would constitute a shift in momentum in the stock.
Investor Takeaway
ASTR stock continues to be a volatile investment. However, there are plenty of things to like. The company’s management is as solid as ever. They handled the failure of the LV0006 well and have made the necessary adjustments for this next launch.
I don’t have a crystal ball and I can’t predict how the LV0007’s launch will go. I do know as a long-term investor, Astra’s management has a very good shot of executing its plans in 5-10 years.
ASTR stock could be considered a steal at these levels.
On the date of publication, Joseph Nograles 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.
Joseph Nograles is a part-time freelance copywriter focused on the financial industry. He has worked in a wide variety of industries from tech to consulting with one of the “big four.” He has always enjoyed analyzing businesses and has been a CFA charterholder for nearly a decade now.
