Investing in Space

Investing in Space: Cash crunch

SpaceX's Crew Dragon capsule Freedom floats under parachutes before splashing down in the Atlantic Ocean to complete the Crew-4 mission for NASA on Oct. 14, 2022.
Bill Ingalls / NASA

CNBC's Investing in Space newsletter offers a view into the business of space exploration and privatization, delivered straight to your inbox. CNBC's Michael Sheetz reports and curates the latest news, investor updates and exclusive interviews on the most important companies reaching new heights. Sign up to receive future editions.

Overview: Cash crunch

After a dozen space ventures rushed through the gates to go public via SPACs, a market downturn and the pinch of rising inflation have been ruthless to the fresh stocks. We're now in the final quarter of the year, and for several space companies, it's survival time.

"It's not because they're necessarily bad businesses. They weren't proven businesses and the tide went out," a banker familiar with the sector told me about the environment for space stocks. "How many can bleed their way through to the market reopening?"

While not a definitive metric, the cash burn rates of de-SPAC space companies – from AST SpaceMobile to Redwire and more – give a window into the urgency of the situation. Among the group, the burn rates for the first half of the year meant the average company, as of August, had roughly enough cash to last another three quarters.

Already, Astra's received a stock delisting warning from the Nasdaq for falling under $1 a share, and with their respective shares trading under a buck fifty, Spire Global, Momentus and BlackSky face a similar risk. Plus, a low stock price compounds the difficulty of raising capital.

As another banker told me this week: "Every one of these companies is looking for capital" – not just stating the obvious, but pointing to a race against a ticking clock. The first banker added, "Everyone's either actively raising money — or contemplating it but the market's so sh---y that they're a deer in the headlights." 

The question is whether companies can find the necessary capital in time, especially without over-diluting ownership. Some can turn to existing shareholders. That's a track Virgin Orbit and Terran Orbital are taking, tapping Virgin Group and Lockheed Martin, respectively, according to people familiar with the companies' dealings. 

Private space companies are feeling the pinch as well. Following year-after-year funding records, Space Capital's third-quarter report found venture capital investment volume in the sector "was down 44% vs the broader market 31%."

"Companies with high upfront [capital expenditures], including Launch and Emerging Industries, are likely to be the most impacted over the next few years," Space Capital managing partner Chad Anderson wrote in the report.

What's up

  • SpaceX returns the Crew-4 mission for NASA: The company splashed down its fourth operational crew mission from the International Space Station, returning NASA astronauts Kjell Lindgren, Bob Hines and Jessica Watkins, as well as ESA astronaut Samantha Cristoforetti after six months in orbit. – CNBC
  • Lockheed Martin Q3 results show sales and profit up in its space business. The defense giant attributed increased net sales to a missile defense program and the improved profit to more launches by joint venture United Launch Alliance. – Lockheed Martin
  • Iridium reported third-quarter earnings up on both the top and bottom lines, with the company's total communications subscribers rising 5% from the previous quarter to just under 2 million. – Iridium
  • The Pentagon and SpaceX's tug-of-war over picking up the Starlink tab in Ukraine spilled into public view, after a reported letter from Elon Musk's company asked the Department of Defense to take over funding of the satellite internet service in the fight against Russia's invasion. – CNN / Politico / CNBC
  • SpaceX rolls out Starlink Aviation, an inflight WiFi service targeting largely private jets. The company now offers Starlink internet service to residential, business, RV, maritime and aviation customers. – CNBC
  • Debut of Europe's next-generation rocket Ariane 6 delayed to the fourth quarter of 2023. The European Space Agency and French rocket-builder ArianeGroup announced the further delay of the long-awaited large rocket, which is years behind schedule in development. – ESA
  • Scotland-based rocket company Skyrora's launch attempt fails: Its suborbital vehicle Skylark L got off the pad at remote Langanes, Iceland, but an anomaly sent the rocket into the sea near the launch site. – Watch here
  • National Science Foundation announces collapsed Puerto Rico radio telescope will not be rebuilt. Cable supporting the 1,000-foot-wide Arecibo Observatory snapped in 2020, causing severe damage. – AP

Industry maneuvers

  • Relativity adding 150 acres at NASA's Stennis center to expand rocket engine test facilities. The company signed a deal with the agency to more than quadruple its footprint, as Relativity develops its reusable rocket called Terran R. – CNBC
  • Astra announces orders for over 200 spacecraft engines, measuring back to when the company acquired Apollo Fusion in July 2021. – Astra
  • UK rocket builder Orbex raised about $46 million in a round led by the Scottish National Investment Bank, as the company prepares for the first launch of its Prime rocket. – Orbex
  • Firefly Aerospace adds former Airbus executive to board of directors: The rocket builder brought in Chris Emerson, a partner at Firefly's major shareholder AE Industrial Partners and former chairman and CEO of Airbus's U.S. space business. – Firefly

Market movers

  • Mynaric stock rallied 27% this week. The laser communications company's shares posted one of the best days since its public debut after Mynaric announced it will supply terminals for 14 Northrop Grumman satellites. – Mynaric

On the horizon

  • Oct. 22 - OneWeb launches resume with India's GSLV rocket to deliver 36 satellites to orbit.
  • Oct. 24 - SpaceX COO Gwynne Shotwell speaking alongside NASA leadership at the ASCEND conference in Las Vegas, Nevada.