In a definitely surprising move, Astra is at the center of discussions about going private, as its co-founders, Chris Kemp and Adam London, have tendered an offer to take the company out of the public stock.
Over the past two years, the company has distinguished itself as one of the few startup launch companies to successfully achieve orbit with a small satellites launcher. This achievement surely represents the technical quality of Astra’s engineers, dedicated to realizing the vision set forth by Kemp and London when establishing the company in 2016.
However, despite its technical milestones, its financial health has experienced a significant downturn. Going public in mid-2021 with a valuation of $2.6 billion, the company’s current market value has plummeted to approximately $26 million, as indicated by its recent closing price on the Nasdaq stock exchange.
Lowest valuation ever
Notably, the market value had dipped even lower just a week ago. The tide turned when Kemp and London disclosed their proposal to privatize the company, citing the belief that Astra’s strategic objectives and business prospects would be better served in a private capacity.
In a letter addressed to Astra’s board of directors, Kemp and London explained:
“Taking the company private while delivering a meaningful premium to current shareholders allows for the best interests of shareholders as well as the Company, its employees, and its customers to be met.”
The offer outlines plans to secure $60 million to $65 million in capital for Astra, based on the proposed purchase price per share, cash consideration to shareholders, and other relevant factors. Kemp, serving as CEO, and London, the Chief Technology Officer, expressed confidence in their ability to expedite the due diligence process given their intimate familiarity with the company.
A not-that-successful company
Kemp’s company journey has been marked by both achievements and setbacks.
Originally going public through a merger with a special-purpose acquisition company (SPAC) in 2021, the company’s ambition was to develop a small satellite launcher boasting cost-efficiency and rapid deployment.
However, setbacks with its Rocket 3 launch vehicle led to a strategic shift, including layoffs and a pivot towards producing electric thrusters for small satellites, a business in which the company seems way more successful and established in the market.
Speaking with ArsTechnica, Kemp clarified in August that Astra was not in a fight for survival, despite challenges in the launch business. The company’s Rocket 3 faced five failures in seven orbital launch attempts, prompting the transition to the development of Rocket 4.
However, financial constraints have hindered Astra’s progress, and a report from Bloomberg suggested the possibility of selling a majority stake in its in-space propulsion business to address short-term financial woes.
The company recently faced a default on a loan, acknowledging in an SEC filing that its cash reserves had fallen below $10.5 million. A subsequent injection of approximately $13.4 million from investors alleviated immediate concerns but underscored the financial fragility of the company.
A new chapter as a private company?
Against this backdrop, Kemp and London’s offer to take Astra private introduces a new chapter in the company’s narrative.
Analysts, and also Space Investors, have predicted since months, if not years, challenges for the smallsat launchers industry. Recent events like the financial struggles of Astra and the demise of Virgin Orbit are serving, probably, as indications of a potential reckoning.
Someone still survive though: Rocket Lab has established itself as the leader in smallsat launch services, having now three different operational Launch Pads, a streamlined factory for Booster production and a dedicated kick stage for missions that require precise orbit deployment or last-mile service delivery.
In all fairness, looking deeply into Rocket Lab’s finances, everyone can see that its major revenue business is not Launch Services, but Space Systems. Still, the backlog for 2024 is already at 22 launches for the Electron rocket.
On the other hand we have Firefly, which has recent completed a very unique mission for the DoD and Space Force, launching an Alpha rocket with only 24-hours notice. This was their third mission overall, and it seems that they’re ready and preparing to get the title of the second most reliable smallsat launch company.
So why are other companies struggling? The answer is quite simple: SpaceX.
Elon Musk’s company has totally disrupted the market with cost-effective rideshare missions, with the most recent one — the 9th — launched just days ago, posing a formidable challenge to competitors. Most customers are not willing to pay more, significantly more, to have a dedicate launch instead of a rideshare on the world most reliable, most launched, and most cheaper rocket per kilogram available at the moment.
The outcome of Astra’s privatization proposal remains uncertain, and the broader space industry continues to evolve amid financial constraints and heightened competition. As the space race unfolds, only time will reveal Astra’s destiny and the impact of decisions made by its co-founders in steering the company’s course.