With an abundance of space stocks having recently come to market, I believe that Astra Space (NASDAQ: ASTR) is best suited to conquer the small launch vehicle market. The company delivers satellites and other payloads for its customers with the use of its small rockets. So, with the Astra share price down 45% year to date (YTD), this could be an opportunity for me to buy the dip on this space stock.
Astra ordinary
Astra has achieved a feat that its competitors haven’t. It’s the fastest space launch company to reach orbit, only taking five years. This wouldn’t have been possible without the leadership and vision of CEO Chris Kemp and his co-founder, Adam London. Prior to being Astra’s co-founder, Kemp was the CTO at NASA while London led initiatives of miniaturising high-performance rocket tech.
This attracted the support and funding of multiple governmental space agencies, which has led to Astra’s obtainment of a Part 450 license from the US Federal Aviation Administration. The license allows for a higher launch frequency and greater regulatory flexibility.
The launch company’s financials are also in tip top condition. Its excellent balance sheet with zero debt and $325m in cash and equivalents leaves the launch company in a healthy position. As such, it can scale its services without having to raise capital for the foreseeable future. This is in part due to its ability to produce the cheapest rockets in the market.
Space to grow
Although Astra’s current rocket only carries up to 150kg to low earth orbit (LEO), Kemp has mentioned his intention to build another rocket. Rocket 4 will be able to carry much heavier payloads beyond LEO with trials expected to commence in Q3. This is to capture customers from the sanctioned Soyuz service that have heavier satellites. Moreover, its partnership with Spaceflight, the leading global launch services provider, should help Astra achieve its goal of daily launches by 2025.
To complement this, Astra has launch contracts with NASA, Space Force, the US Department of Defense, Planet, and Spire Global. With industry tailwinds of an increasing lightweight satellite market, Astra has plenty of momentum on its side, having already secured $160m in total deal value as of Q4 2021.
So, what happens after 2025? Well, Astra is expected to expand its offering beyond launch services, as the CEO disclosed Astra’s goals to offer space products and services. These include electric propulsion systems and constellation services for networks. In fact, Astra recently secured a deal with Leostella to provide multiple engines and propulsion systems for its satellites.
Staying grounded
Despite the potential of this space stock, I think it’s also important to be realistic with my expectations. Delays and setbacks are more not uncommon in such a new industry, with Astra already experiencing a couple. Pair that with a slowing economy, and Astra’s goal of daily launches may suffer hiccups along the way. Nevertheless, I am bullish about the company’s prospects for the future and its ability to outdo its peers. With an average target price of $5, this presents a 50% upside to its current share price. Therefore, I’ll be looking to buy more shares in Astra at a bargain.
