Hello all. I have been taking advantage of the recent pull backs to initiate a space position. Surprisingly so have found few recent discussions including ASTR and they have had some new catalysts so I’m hoping to get others thoughts here. Disclosure: I am long ASTR and I’m considering going long RKLB and ASTS.
ASTR had a wild week! Many are aware that ASTR had a failure in their last launch attempt which resulted in the price falling to below $3 briefly. ASTR was able to rapidly identify the cause, fix it and attempt to fly again. That tells me they have built the important process improvement mechanisms internally to iterate rapidly successfully. ASTR had a successful return to flight on Tuesday BUT the rocket lost connection right before the payloads were to be deployed. This was eerily similar to the last failure which occurred at a similar time in the launch and caused enough people to freak out to cause an over 20% drop and then mostly recover when successful deployment of all satellites was confirmed although trading was halted for volatility briefly. Then on Thursday ASTR delayed earnings release to 3/31 which caused a further 6% drop.
Today the CEO interviewed on CNBC and provided clarification on a number of points. The loss of signal was simply due to the launch angle and lack of radio antennas in the Pacific Ocean. It would have been helpful if they had informed everyone of that expected event beforehand, but oh well. The earnings release date change was due to a change in reporting status but he reiterated a positive outlook. Lastly he touched on the increased demand the launch industry will see due to Russia exiting the market. He also claimed ASTR is making a rocket a month currently. ASTR closed up nearly 14% today.
ASTR up to recently has been significantly shorted. According to Fintel there is a 23.07% short interest and 40.37% off exchange short volume.
ASTR will likely benefit enormously from the Russian conflict. In addition to customers needing rides that they can’t use in Russia, the military may significantly increase their use. The US Space Force was one of ASTR’s first customers. The ability to launch from nearly anywhere to any orbit on short notice provides the military with options that no one else can meet. ASTR also is planning on a point-to-point system for Rocket 4. The ability to get a small payload anywhere in the world in 90 minutes may provide a significant market. It’s essentially the same Rocket 3 they are making with a modified second stage so the cost to develop shouldn’t be crazy high.
The earnings call provides an opportunity for significant positive catalysts that might trigger reinforcements higher from the open short positions. There are planned launches monthly for the next few months. Of course a failure would be a significant negative catalyst.
Why is ASTR still off prior highs in the 12-15 range? They had multiple failures in 2021 as well as multiple lawsuits alleging that capabilities and market size presented were false.
ASTR closed at $4.60 and I plan to continue to go long via calls. Baring a failure in the near future, ASTR seems poised to enjoy high demand for service while decreasing costs.
I have followed RKLB as a space enthusiast but I am planning on initiating a position. Most discussions I have read have compared RKLB and ASTR as an either or and I now believe that is false. As SpaceX moves into starship RKLB will expand into near American Broomstick 9 size payloads. RKLB’s Neutron seems well positioned to be significantly less expensive than Falcon 9 and able to launch 80% of the payloads currently flying on the American Broomstick. With ASTR able to launch cheaper than Electron I believe both will evolve into their own markets and complement each other. RKLB has recently developed a new lightweight highly efficient solar panel that is radiation hardened. Diversifying income into supplying solar panels seems like an excellent earnings center.
ASTS is developing a space based cell phone system intended to supplement terrestrial systems. Assuming the technology will work then the success will depend on funding and execution. ASTS has major backing from current networks and one would assume they are committed to building out such a network. Execution recently received a thumbs up when the company secured multiple launches with SpaceX through 2024. With Soyuz off the market demand will exceed capacity for awhile, but ASTS secured their rides. The upside for such a network is limitless, and with war in Europe raging the need for satellite access for citizens is desperately clear.
I believe all three companies complement each other well. ASTR is a high beta play with a beta at 2.14. This elevation, however reflects a launch failure that has now been corrected and a return to flight conducted. If my thesis for these companies is true, then the upswing in stock price will be significant. If I am wrong there will likely be violent share erosion. For these reasons I have chosen to use longer dated OTM call options.
This is my first review. I hope you found this helpful and I invite feedback.
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