With launch costs decreasing by 95% to broaden the range of possible applications, humankind is well on turning space into an industry that is set to generate $1 trillion in annual revenue by 2040. According to analysts, satellite broadband advanced manufacturing, launch services, and ground equipment will accompany the majority of the revenue growth in the sector.
Furthermore, space travel and asteroid mining applications are expected to drive further growth.
However, this highly-promising sector bears the brunt of short-term macro headwinds, such as the Russia-Ukraine war and sky-high inflation. Moreover, increasing borrowing costs due to the interest hikes may threaten to turn off the funding tap on fledgling businesses in this cash-guzzling industry.
The bearish sentiment surrounding the industry’s near-term prospects is evident from ARK Space Exploration & Innovation ETF’s (ARKX) 34.9% decline this year. Given this backdrop, beaten-down space stocks Maxar Technologies Inc. (MAXR), Virgin Galactic Holdings, Inc. (SPCE), and Astra Space, Inc. (ASTR) could be best avoided until their fortunes revive.
Maxar Technologies Inc. (MAXR)
MAXR is a space technology company. The company operates through two segments: Earth Intelligence and Space Infrastructure. It offers its solutions in the United States, Asia, South America, Europe, the Middle East, Australia, Canada, and internationally.
In August, it was announced that MAXR would transfer 123 satellite manufacturing jobs to Sanmina Corp. (SANM), an outsourcing firm. Outsourced production is expected to take several weeks, raising concerns about timelines and the quality of deliverables.
In the same month, MAXR disclosed that its new imagery satellites would launch later in the year than expected after the company ran into snags with software for the spacecraft. Covid-related work stoppages and other issues have delayed the debut of the WorldView Legion satellites.
In the second quarter ended June 30, 2022, MAXR’s revenues decreased 7.4% year-over-year to $438 million. During the same period, the company’s total adjusted EBITDA came in at $119 million, down 9.8% year-over-year. This has led to a net loss of $30 million and a loss per common share of $0.41, in contrast to a net income of $45 million and $0.60 per common share in the year-ago quarter.
The stock has declined 36.5% over the past six months and 30.7% over the past year to end the last trading session at $22.60.
MAXR’s uncertain prospects are confirmed by an overall POWR Ratings of D, which equates to a Sell in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
MAXR has been graded D for Momentum, Sentiment, and Quality. Within the Outsourcing - Business Services industry, it is ranked #40 among 41 stocks.
Click here to see additional POWR Ratings for Growth, Value, and Stability for MAXR.
Virgin Galactic Holdings, Inc. (SPCE)
As an aerospace and space travel company, SPCE develops, manufactures, and operates spaceships and related technologies for conducting commercial human spaceflight and flying commercial research and development payloads into space.
In August, SPCE disclosed that it is seeking to sell up to $300 million worth of shares to raise money "for general corporate purposes, including working capital, general and administrative matters and development of its spaceship fleet and other infrastructure to scale its commercial operations." Thus, the company delayed its initial launch for the third time in less than a year.
SPCE’s revenue decreased 37.5% year-over-year to $357,000 in the fiscal quarter that ended June 30. Operating loss widened 48.5% from the prior-year period to $109.72 million. The company’s net loss came in at $110.72 million and $0.43, worsening 17.7% and 10.3% year-over-year, respectively.
For the fiscal quarter ending September 2022, analysts estimate SPCE’s revenue to decrease 96.3% year-over-year to $94,620. Loss per share is also expected to widen 115.8% over the prior-year period to $0.41. Also, the consensus revenue estimate of $1.29 million for the current fiscal indicates a 60.8% decrease from the last year.
The stock has slumped 78% over the past year to close the last trading session at $5.72.
It’s no surprise that SPCE has an overall F rating, which translates to Strong Sell in our POWR Ratings system. SPCE also has an F grade in Growth, Stability, and Sentiment and a D for Value and Quality. It is ranked last among 31 stocks in the D-rated Airlines industry.
To see the additional POWR Ratings for Momentum for SPCE, click here.
Astra Space, Inc. (ASTR)
ASTR provides launch space services to satellite operators, satellite manufacturers, government agencies, and prime defense contractors. The company offers its services through a constellation of small satellites that can fit inside standard shipping containers for deployment anywhere in the world where its spaceports are located.
For the fiscal 2022 second quarter ended June 30, 2022, ASTR’s operating expenses increased 126.9% from the year-ago value to $67.84 million. Its operating loss widened 176.3% year-over-year to $82.61 million. Net loss worsened 163% from the prior-year quarter to $82.30 million. Loss per share came in at $0.31 in the same period.
For the fiscal quarter ending September 2022, Street expects ASTR to report a loss of $0.18 per share. Also, the company’s loss per share for the current year is expected to come in at $0.86, widening 28.1% from the previous year.
The stock has slumped 76.7% over the past six months and 92.2% over the past year to close the last trading session at $0.79.
ASTR’s POWR Ratings echo the pessimism regarding the stock’s prospects. The stock has an overall F rating, equating to a Strong Sell in our proprietary rating system. It also has F for Stability and Sentiment and a D for Growth and Quality.
In the 31-stock Airlines industry, it is ranked #30. Click here to see the additional POWR Ratings for ASTR for Momentum and Value.
MAXR shares were unchanged in after-hours trading Tuesday. Year-to-date, MAXR has declined -25.25%, versus a -17.12% rise in the benchmark S&P 500 index during the same period.
About the Author: Santanu Roy
Having been fascinated by the traditional and evolving factors that affect investment decisions, Santanu decided to pursue a career as an investment analyst. Prior to his switch to investment research, he was a process associate at Cognizant. With a master's degree in business administration and a fundamental approach to analyzing businesses, he aims to help retail investors identify the best long-term investment opportunities.
3 Space Stocks That Aren't Ready for Takeoff Right Now StockNews.com
