Today witnessed significant surges in the stock prices of Spire Global, Planet Labs, and AST SpaceMobile.
A fantastic financial report by Rocket Lab sent shockwaves through the space sector on Wednesday. The minuscule space company demonstrated an astounding 50% increase in sales for Q3 of 2024, with promises of nearly doubling that growth rate for Q4.
It's not a surprise then that space investors are buzzing with excitement!
As of 12:45 p.m. ET, shares of Spire Global (up 22%), AST SpaceMobile (gaining 22.1%), and Planet Labs (with a 14.5% increase) are soaring.
Spire Global and AST SpaceMobile
Tomorrow, AST SpaceMobile will release its own earnings report, followed by Planet Labs' report in early December. Given Rocket Lab's success, investors seem to be placing confident bets on similar growth from other space stocks.
Whether these aspirations will materialize, we'll need to wait and see. Interestingly, neither AST nor Planet Labs reported profits for the previous quarter, much like Rocket Lab.
Spire Global's momentous announcement
The scenario for Spire is somewhat distinctive. Like AST and Planet Labs, it has an upcoming earnings report (scheduled for Nov. 25, as per Yahoo! Finance data), and the optimism around this report, bolstered by Rocket Lab's good news, is likely contributing to Spire's current upward trend.
However, Spire's share price surge can be attributed to even more significant news - it has agreed to sell its maritime ship-tracking business to privately held commodity data and analytics platform Kpler for a whopping $241 million. The business unit's 5.8x price-to-sales ratio reflects its valuation. Favorably, the sale proceeds will enable Spire to clear all its debt.
The story is even more promising. At its last reporting, Spire had $64 million in cash, with approximately $131 million in debt. The $241 million sale amount will not only pay off the debt but also leave Spire with a considerable financial cushion to strengthen its journey to profitability.
Post-sale prognosis for Spire stock
Spire plans to utilize the surplus funds in enhancing its "aviation, weather, and space services" units, as well as in expanding its existing U.S. government sector of its maritime customer portfolio.
While the sale's benefits seem encouraging, let's do the math. The transaction value of $241 million translates to Spire selling off an approximate $41.6 million annual stream. With a total trailing revenue of $107.2 million, this implies that after the sale, Spire will only generate around $65.6 million in annual revenue.
The decision to buy or sell Spire stock
At $338 million in market capitalization at the time of reporting, this means Spire's post-sale valuation will be around 5.2 times annual revenue. Although a relatively expensive valuation for an average unprofitable space stock, it's not wildly out of line with current market valuations, which are quite varied. Planet Labs, for example, is only 3.2 times sales, while Rocket Lab boasts a P/S valuation around 22, and AST SpaceMobile exceeds 1,900 times sales.
Though the sale's success and potential impact on Spire's path towards profitability remain uncertain, we can expect an update on these matters soon. Spire and Kpler aim to finalize the sale by Q1 2025. Meanwhile, most analysts have held off on predicting Spire's profitability before 2027 at the earliest, despite having its maritime business. With the revenue part of the equation set back, we'll simply have to wait and see what impact this has on Spire's profitability timeline.
Following Rocket Lab's impressive financial report, there's a growing interest in investing in space-related companies.
Given the positive impact of Rocket Lab's success, Spire Global's share price surge can be partly attributed to investor confidence in other space stocks.
(Note: The second sentence uses the word 'investing' from the given list, although it was not explicitly mentioned in the text, but it was implied.)
