The space technology sector has captured investors' imagination in recent years, and a stock that has emerged as one of the most dramatic stories in this vertical is Sidus Space (SIDU). Founded in 2012, Sidus Space is valued at $23.4 million by market cap.
This space tech penny stock has surged 320% in the past month, and soared 264.4% in the past five trading sessions alone. But can SIDU deliver outsized gains for long-term shareholders?
While its meteoric rise has turned heads on Wall Street, it's essential to understand that past performance doesn’t guarantee future returns, especially when it comes to volatile penny stocks.
So, let's examine what's driving investor enthusiasm around Sidus Space, analyze its business, and explore whether the penny stock deserves a place in your portfolio.
How Did Sidus Space Perform in Q3 of 2024?
Sidus Space is a micro-cap company with a small but growing revenue base as it aims to evolve from a space manufacturing company to a space services provider. The company focuses on satellite design, manufacturing, and deployment.
The successful launch of LizzieSat, its first satellite platform, in March 2024 marked a crucial milestone for Sidus Space, allowing it to attract new business opportunities and build customer confidence.
Sidus Space increased its sales from $1.4 million in 2021 to $7.3 million in 2022, although the top line then declined to $6 million in 2023 and to $5.2 million over the past 12 months. In its mid-November earnings release, Sidus Space reported revenue of $1.9 million in Q3 of 2024, up 90% year over year.
Recently, a notable contract with Lonestar Data Holdings positions Sidus as the exclusive manufacturer of six data storage satellites for lunar orbit. The contract demonstrates the versatility of the LizzieSat platform and an ability to scale for various mission types.
Additionally, the company secured FCC approval for LizzieSat-2, paving the way for a micro-constellation in low-earth orbit. With LizzieSat-2 ready for launch in December 2024 and LizzieSat-3 scheduled for Q1 of 2025, Sidus is well-positioned to leverage expanded orbital capabilities.
What's Next for the Penny Stock?
Despite strong revenue growth in Q3, Sidus is wrestling with financial constraints. For instance, it remains unprofitable, and reported a gross margin of just 2% in Q3 of 2024 - down from almost 40% in Q1 of 2023. On the positive side, its net loss narrowed from $4.1 million to $3.9 million over the past 12 months.
Analysts tracking Sidus Space expect its sales to surge from $8 million in 2024 to $11.2 million in 2025. Comparatively, adjusted losses are forecast to narrow from $3 per share to $2.82 per share in this period.
Sidus Space appears to be at an inflection point as its unique business model focuses on technological advancement, serving multiple markets such as government, defense, and intelligence.
The planned integration of Iridium-enabled tech into future satellites and the development of advanced switch cards also show the company’s focus on innovation. However, like other penny stocks, Sidus Space remains a high-risk investment due to its low profit margins and volatile revenue growth.
The single analyst tracking SIDU stock has a “Strong Buy” recommendation and a target price of $10, indicating an upside potential of more than 108% from current levels.
