New York (CNN Business)In the minutes after Astra — a US-based startup — launched its rocket from a remote location in Alaska on Tuesday afternoon, investors seemed ready to believe the company had yet again failed to keep the mission on track.
astra (ASTR) confirmed on Twitter that the rocket had made it into orbit, but it wasn’t immediately clear if its payload – a group of small satellites serving a variety of customers – was safely launched into orbit.
During a webcast of the launch, Carolina Grossman, Astra’s product director, warned that the company would not know immediately if the satellites would be safely deployed because the rocket was unable to send ground measurements in the minutes after it reached orbit.
After the start, 30 minutes of silence passed. Astra stock lost more than 10% of its value and trading was briefly halted.
But then another update came: “Today we can confirm the successful use of the satellites on Spaceflight’s Astra 1 mission,” the company continued Twitter. But the company’s stock didn’t immediately turn around. Twenty minutes after confirming the success, the stock price was still down more than 3%.
The ordeal shows how volatile investing in a rocket company can be — especially if they choose to launch a rocket during trading hours.
Astra in particular has been on a wild ride in recent months. The company had five failures trying to put a rocket into orbit before its first success in November 2021. This led to a massive spike in trading, sending the stock price up more than 30%. But then, in February, another failure happened.
Now the company’s stock is consistently below the $4 per share mark, a far cry from its peak of more than $16 per share.
Astra is one of dozens of companies planning to use relatively small, light rockets for frequent trips into space to deliver satellites — not to be confused with the far larger rockets launched by Elon Musk’s SpaceX or the suborbital space tourism rocket he is developing Blue Origin, Jeff Bezos’ company.
California-based Astra, Rocket Lab and Virgin Orbit are among the only startups that have now proven their rockets can get the job done.
And all of these companies have now gone public through SPAC, or Special Purpose Acquisition Company, which serve as investment placeholders on the stock market while backers of the fund look for a takeover target. The target company then adopts the SPAC’s trading symbol, allowing it to go public with little financial disclosure or scrutiny associated with traditional IPOs.
That’s not to say Astra and the others can’t or won’t be successful. But the company faces stiff competition.
When asked in a Q&A company posted online how Astra plans to differentiate itself in such a crowded industry, Adam London, Astra’s founder and chief technology officer, said that “rockets are typically artisanal, handcrafted objects. They make one after the other and they are very complicated. But if you really get into it, they don’t have to be that complicated, especially if you’re not flying people or critical national assets, and they don’t necessarily have to be working 100% of the time.”
In other words, Astra plans to mass-produce rockets to make them cheaper, but it doesn’t put too much stock in having a spotless success rate.
And that means the stock will likely continue to be a wild ride for the foreseeable future.
But that’s not necessarily a bad thing, said Micah Walter-Range, president of space consulting firm Caelus Partners.
“The stock volatility surrounding the launch of Astra can be taken as a positive sign as investors monitor the company’s progress and actively engage with the space industry,” he said via email. “Market movements also show that this is still an emerging industry, and we look forward to the day when takeoffs will be considered as routine as flights, with investors monitoring overall trends but not each individual flight.”
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