Astra Space (NASDAQ: ASTR) is — as the names suggests — a space launch company that operates specifically in the field of small launch vehicles. It sends small rockets into space to deliver satellites and other payloads for customers. It also does so at the fraction of the cost of its competitors. So, with the Astra Space share price down over 40% year to date (YTD), and the firm releasing its latest results yesterday along with guidance for the future, I’m wondering whether to add more shares to my portfolio.
Cash is king
With early-stage growth companies like this, I always pay close attention to two financial variables — cash and debt. Fortunately, Astra reported healthy balance sheet numbers. The company finished the year with $325m in cash and equivalents as well as zero debt. Although total cash came in lower than in Q3 2021, I was relieved to see cash burn decrease from $68m to $53m. This eases my nerves as Astra may be able to develop and scale its services without having to significantly dilute its shares to raise capital in the near future.
Bigger rocket share
Aside from cash and debt, I pay an equal amount of attention to total deal value, because it gives an indication of future cash flows. This is the total amount Astra could stand to make from launch contracts. Astra’s deal value didn’t increase exponentially due to the smaller capacity on its Rocket 3 limiting the number of customers it can do business with, but there was still a 33% increase year-on-year to $160m. Nonetheless, with Astra’s latest payload success and cheaper prices than its competitors Rocket Lab and Virgin Orbit, I have confidence that CEO Chris Kemp and his team have got what it takes to grab a bigger market share as Astra continues to scale.
Rocket 4 customers
When Chris Kemp went on CNBC last month, he mentioned that customers from the now-sanctioned Soyuz service could switch to Astra. This sent the Astra share price soaring 31%. However, its Rocket 3 can only support less than half of Soyuz’s customers due to its weight limit. Astra also lost a potential customer in OneWeb that chose to launch its satellites with SpaceX instead. When questioned about this on the earnings call, Kemp mentioned Astra’s ambitions to create Rocket 4, which will be able to accommodate heavier satellites. He also spoke about the introduction of a new launch system that will be more efficient and effective, and will be on display at its upcoming launches later this month.
Making progress
Despite the pros, I remain cautious. Although the company recently launched its first successful payload, there’s always a possibility that the next launch is a failure, hindering progress and profits. The soaring prices of aluminium that Astra uses to build its rockets could dent profit margins too.
Nevertheless, having witnessed Astra overcome many hurdles, I have faith in Kemp and his team. The 33-day period between its last two launches shows it’s getting closer to its target of weekly launches by 2023 as the gap between launches is narrowing. Therefore, with the Astra Space share price currently slumbering, I see it as a bargain and this as a good time to pick up more shares for my portfolio.
