Astra Space (NASDAQ:ASTR) is a compelling space startup in the nascent satellite delivery market. Moreover, the company has been executing well and ramping up its capabilities swiftly in the coming years. The private space economy is likely to grow at a rapid clip, with governments and telecom companies looking to dominate the space frontier. However, the risks remain with ASTR stock, making it more of a high-risk, high-reward investment.
Astra is a rocket startup that focuses on limiting small satellites’ delivery costs that weigh less than 400 kilograms. It went public after closing a SPAC deal in July last year. ASTR stock was off to a strong start, but got hammered after a failed launch attempt in August. Since July the stock value has lost more than 52%.
However, it did deliver its first successful test flight back in November. Moreover, there have been plenty of positive developments with Astra of late, which points to a healthy upside ahead. Investors with a gambling mindset could generate sizeable returns from the stock this year.
Astra has been on the move in 2021, to quickly transition into the commercialization stage. After its failed launch attempt in August, many had written off the company but it as comeback with aplomb. It acquired Apollo Fusion back in June, an enterprise that focuses on the development of propulsion systems. The addition of the company greatly expands Astra’s offering and its ability to offer a more holistic solution. After a failed test flight attempt, it came back with a vengeance and broke new ground with a successful flight from the same Launchpad.
It plans to manufacture a dozen of its Rocket series vehicles and has planned 15 launches this year. Furthermore, Astra will also be delivering a satellite for the U.S. Space Force during the first quarter. Additionally, it was selected by the new military arm for a highly lucrative IDIQ contract involving $986 million in over nine years.
On top of that, the company has also done an amazing job in building a strong leadership and management team. “We’ve almost invested more time in building the team for the last six months than we have in this transaction because we knew this day was coming,” CEO Chris Kemp said ahead of the listing. Kemp previously served as chief technology officer at NASA, among his other tech giant bona fides.
Astra is still in the pre-revenue stage but has maintained a strong liquidity position. The company has a large order backlog, which points to healthy cash flows ahead. Estimates suggest that it could become cash-flow positive within the next couple of years.
The firm had $450 million in cash after its SPAC merger. However, after signing several deals during the recent months, its cash till is down to $380 million. Given its current cash balance, it could be looking at 30 months of available liquidity.
Its debt doesn’t look like a massive issue at this point but could become one if there unsuccessful launches down the line. Hence, the company must nail its objectives; otherwise, it could pose a financial threat.
Bottom Line on ASTR Stock
ASTR stock is another fascinating play in the burgeoning space sector. The rocket startup operates in a unique niche that has the potential for substantial growth in the future.
Recent positive developments suggest that the company is in the fast-approaching commercialization stage and could generate revenues this year. However, several risks weigh down the attractiveness of the stock.
Therefore, ASTR stock remains a high-risk play that could potentially pay a lot of dividends in the future.
On the date of publication, Muslim Farooque 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.
Muslim Farooque is a keen investor and an optimist at heart. A life-long gamer and tech enthusiast, he has a particular affinity for analyzing technology stocks. Muslim holds a bachelor’s of science degree in applied accounting from Oxford Brookes University.