The blockchain and crypto industry has never stood still including during the prolonged lean period known as the crypto winter, asserted Michael Amar, co-founder of the Paris Blockchain Week Summit. Amar believes the resilience shown by market participants during this period demonstrates a new level of maturity in the industry. Engagement Between Startups and Developers […]
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I am a value investor. That means two things: First and most obviously, I like stocks that sell for reasonable prices relative to their growth prospects. And second, I’m extremely suspicious of buying into hot growth stocks that are “going up” a lot — stocks like Intuitive Machines (LUNR -0.66%).
Two weeks ago, if you recall, Intuitive Machines launched a Nova-C class lunar lander named Odysseus on a course to the moon. On Thursday last week, Odysseus conducted a mostly successful soft landing on the moon — the first American spacecraft to accomplish this feat in more than 50 years.
— Intuitive Machines (@Int_Machines) February 22, 2024
No sooner had this news been announced than Intuitive Machines stock exploded 25% higher. And now, I’m giving serious thought to buying Intuitive Machines stock for myself.
Why would I consider doing this — and seemingly breaking a cardinal rule of value investing in the process? Well, let me explain first why I might not buy Intuitive Machines stock.
Intuitive Machines went public in the middle of the space SPAC frenzy back in February 2023. IPO’ing at $10 a share, the stock surged past $80 in a matter of days, before turning tail and giving back all its gains. By April 2023, the stock was back trading below its IPO price — and didn’t return to that IPO price until just this month.
But what an exciting month it has been!
From Feb. 7, about a week before the launch, to Feb. 21, a few days after the launch took place, Intuitive Machines stock roughly tripled in price, surging from just $3.50 per share to well over $10. Pulling back just a bit as investors held their breath and awaited the landing attempt, Intuitive Machines surged ahead 16% on Friday, closing the week just below $10 a share. And then on Monday, the stock gave back a lot of those gains, falling to just over $6.25.
At its last recorded stock price, Intuitive Machines sells for less than 2 times trailing sales, which sounds cheap. Problem is, the company is still racking up operating losses (negative $37 million over the last 12 months), burning cash (negative $25 million in free cash flow), and according to data from S&P Global Market Intelligence, is expected to keep on losing money and burning cash for at least the next four years.
But what if it doesn’t?
Few value investors would give a stock like Intuitive Machines a second glance. It’s burning cash. It’s not profitable today. It’s not (supposed to be) profitable anytime soon. It lacks either a trailing P/E ratio or even a forward P/E ratio on which to value the shares.
And yet, this tiny space stock just became the first American company to ever land a spacecraft on the moon. Granted, the landing wasn’t a 100% success. Post-landing reports indicate that Odysseus probably landed sideways, tripping over a rock and toppling over. Intuitive Machines will definitely want to tweak future attempts to prevent this from happening. Quibbles with the quality of the landing aside, though, Intuitive Machines is still unique among space companies. It’s also in a uniquely advantageous position to keep on winning contracts from NASA and other companies wanting to put payloads on the moon – especially as it works the bugs out of its landing procedure.
Indeed, over the next 10 months, Intuitive Machines plans to launch and land two more spacecraft on the moon for NASA. Its 2024 revenue looks likely to nearly quadruple in comparison to 2023, and forecasts for outlying years — which don’t yet figure in the effects of last week’s lunar success — are probably conservative relative to the contracts Intuitive Machines might now win. If revenue rises fast enough, there’s the potential for Intuitive Machines to turn profitable sooner than anyone thinks.
While there’s no guarantee the stock will be a winner, at a valuation of less than 2 times sales — which is toward the low end of what space stocks have been selling for lately — I believe Intuitive Machines stock is cheap enough to buy.
Yes, even for value investors.
Rich Smith has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
A view from onboard the upper stage of rocket LV0009 during the company’s livestream on March 15, 2022.
Astra / NASASpaceflight
The space sector’s on the tail end of a boom-and-bust cycle. While many companies battened down the hatches to survive, a few publicly-traded names are running on fumes.
A flurry of about a dozen space companies went public over the last few years. Although each have had fairly dismal stock performances since their debuts, the majority are still moving forward and look to build momentum in the year ahead, with some closing in on coveted profitability milestones.
But a trio of names appear likely to go the way of Virgin Orbit, which flamed out last year. Here’s who’s most at risk of delisting, acquisition or even bankruptcy.
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Space tug operator Momentus has already warned shareholders that it’s running out of money, and earlier this month the company abandoned plans for its next mission.
Once valued at over $1 billion, Momentus has gone through a tumultuous couple of years. Despite a 1-for-50 stock split last year, its shares currently trade near 80 cents, putting the company at a depressed $7 million valuation.
The next few weeks will likely prove crucial for Momentus to find a major new backer or buyer, or else face bankruptcy.
Astra has been conducting piece-meal financing rounds from a handful of investors over the past couple months, as the company’s been nearly out of cash since October.
Its rocket-launching business has been on hiatus since June 2022, and its acquired spacecraft business is not driving meaningful revenue growth. And, while the company’s founders floated a take-private plan in November, there’s been no word from Astra’s board of directors on the proposal.
Once valued at over $2.5 billion, Astra’s valuation has been under $50 million for months.
Short of completing that take-private deal, it’s unclear how the company could climb out of its cash-desperate situation.
Sidus Space is a little-known space company that went the traditional IPO route in late 2021 and began trading on the Nasdaq at a near $200 million valuation. Sidus has aimed to build its own satellite constellation as a testing or data platform for a variety of customers.
But it’s seen minimal revenue growth and rising annual net losses. While its inaugural satellite was supposed to launch in late 2022, the company has yet to get the spacecraft in orbit, most recently targeting a March launch.
Sidus has raised small amounts of funding through public stock offerings of $5 million or less since its IPO. But it had less than $2 million in cash at the end of September, trading at a near $9 million valuation according to FactSet.
Last month, Sidus performed a 1-for-100 reverse stock split to regain compliance with Nasdaq listing rules.
Momentus, Astra and Sidus did not respond to CNBC requests for comment.
A fourth space company in a potentially precarious spot is satellite imagery company Satellogic. Its most recent financial update only dates to the end of June. At the time, Satellogic disclosed it had substantial doubt of surviving through September 2024. The company’s stock currently trades near $1.50, at a $21 million valuation.
Despite some likely turbulence ahead, the space sector as a whole isn’t necessarily struggling and continues to attract interest from the private markets. Overall, investment in the space sector bounced back in 2023, with companies bringing in $12.5 billion in investment last year.
And while industry analysts predicted a fallout from the flurry of public debuts a couple years back, it hasn’t been as severe as forecast just yet. Many space stocks are below where they were when they came to market — and in many cases well behind original financial forecasts — but most are not on death’s door.
For example, Terran Orbital won’t be near the $411 million in 2023 revenue it forecast when it was going public three years ago. But, despite its stock price trading near 80 cents at a $156 million valuation, Terran Orbital appears to have a lifeline from a key customer.
Earlier this month, Terran announced receipt of a milestone payment from its biggest customer, Rivada, and, on the same day, said its cash at year-end was $70 million, up from $39 million at the end of the third quarter.
Comstock subsidiary Quantum Generative Materials (GenMat) has announced the recent launch of GENMAT-1, marking a significant milestone in exploring untapped natural resources. The Hyperspectral Remote Sensing Imaging (HRSI) system represents a groundbreaking fusion of artificial intelligence (AI) and advanced space technology, paving the way for a new era in resource discovery and analysis.
GENMAT-1 exemplifies the innovative integration of AI as its technology features over 400 spectral bands and a high-resolution capability and is poised to transform how we detect and analyze minerals.
Deep Prasad, GenMat’s Founder and Chief Executive Officer, said,
“We are excited to apply our geophysics-informed models via GenMat’s ZENO platform to the combined GENMAT-1 Hyperspectral Data and Comstock’s extensive historic data.”
The technology captures detailed chemical and physical information about minerals from space previously unseen by the human eye. Integrating AI into this process elevates its potential, allowing for unprecedented precision in identifying and analyzing mineral deposits. This translates to a more efficient and accurate discovery of resources – a cornerstone in advancing various industries and technologies reliant on these minerals.
The true innovation of GenMat’s venture lies in its approach to combining new space-based data with decades of geological information already held by Comstock Mining. By applying GenMat’s advanced AI models, this synergy aims to refine the prediction and analysis of mineral locations and quantities. Such an AI-driven approach in mining could revolutionize how resources are discovered and extracted, potentially increasing yields and reducing environmental impacts.
The implications of GENMAT-1’s launch extend beyond the mining industry. This initiative represents a fusion of AI and space technology, setting the stage for similar advancements in other sectors. It is a glimpse into how AI can enhance our understanding and utilization of natural resources, leading to more sustainable technological practices and innovations. Moreover, it underscores the importance of responsible resource management, aligning with global efforts toward environmental stewardship and systemic decarbonization.
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Virgin Galactic Holdings Inc. shares rallied about 15% in the after-hours session Wednesday after the space-tourism company narrowed its quarterly loss and more than doubled its revenue.
The company also forecast higher-than-expected revenue for the current quarter, although it acknowledged that the guidance is “subject to substantial uncertainty.”
“With six spaceflights successfully completed in under six months, Virgin Galactic has demonstrated the repeatability of our spaceflight system and also showcased the overwhelmingly positive experience of our astronauts,” Chief Executive Michael Colglazier said in a statement.
In a call with investors after the results, Virgin Galactic
SPCE,
detailed its plans for the next year and said that some of its space-tourism spots are going for about $1 million.
The Galactic 6 spaceflight is expected for January, and after that the company will move to a quarterly, rather than monthly, cadence of its Unity spaceflights to focus on the newer Delta flights and on developing the Delta spacecraft, Colglazier told investors.
Virgin plans to pause Unity flights in mid-2024, to focus on the newer-class spaceship, it said. Flights are expected to resume in mid-2025, with a Delta flight test, he said.
Revenue from Galactic 6 and Galactic 7 flights will be around $2 million to $2.5 million, which is about four times more than the revenue per flight realized in the third quarter, Colglazier said.
That’s in part because when seats are available, Virgin is making those interested pay a premium, he said. The seats have been priced “closer to $1 million, versus the $450,000 for earlier seats, he said.
Earlier Wednesday, Virgin Galactic said it lost $105 million, or 28 cents a share, in the third quarter, compared with a loss of $146 million, or 55 cents a share, in the year-ago quarter.
The improvement was mostly due to lower operating expenses and an increase in interest income, the company said.
Revenue rose to $1.73 million, compared with $767,000 in the third quarter of 2022, thanks to commercial spaceflights and membership fees paid by future space tourists and astronauts, it said.
Analysts polled by FactSet expected a loss of 42 cents a share on sales of $1.1 million in the quarter.
The company called for fourth-quarter revenue of around $3 million, which would be double the FactSet consensus of about $1.5 million.
Virgin Galactic said its cash position “remains strong,” with cash and equivalents of $1.1 billion as of Sept. 30.
The production schedule for the new Delta Class spaceship remains on track for revenue service in 2026, it said. Virgin Galactic late Tuesday said it was laying off people to focus on the Delta spacecraft.
Less than one year ago, SpaceX announced that its Starlink satellite communications network was available for military use. And nine months after Elon Musk began advertising a secured satellite network for government entities, the U.S. Space Force has awarded SpaceX its first Starshield contract, which could be worth anywhere from $15 million to $70 million over the course of a year.
The contract encompasses access to the Starlink network and provision of user terminals, ancillary equipment, network management, and other related services, according to the Space Force.
Image source: Getty Images.
Starlink is the SpaceX network of 4,800 internet satellites that sells broadband access around the globe for about $110 a month. Last month, SpaceX confirmed that Starlink had hit 2 million subscribers, a number that implies the service is already generating revenue on the order of $3 billion per year.
And now SpaceX will repurpose part of its civilian Starlink service for military use, thereby monetizing the experience it has developed from operating Starlink in Ukraine. The new service, called Starshield, first registered on the public’s radar in December 2022 when a new tab appeared on the main SpaceX web page, one of eight at the top of the page describing the company’s services.
These include Starlink itself, the Falcon 9 and Falcon Heavy rocket programs, a Starship spaceship still in development, Dragon spaceships for carrying cargo to orbit, a spaceflight program for transporting astronauts to the International Space Station and the moon, and a ride-share program placing small satellites alongside primary payloads on Starlink launches.
Clicking on the Starshield tab, space fans will discover what SpaceX has in mind for this newest service. To wit, building on the company’s experience operating Starlink throughout the war in Ukraine, fending off cyberattacks, and keeping Starlink operational despite Russian jamming attempts. SpaceX has developed proficiency in maintaining and operating a communications network in the middle of a shooting war — a proficiency that, it reasoned, the U.S. military might find helpful.
SpaceX was right about that — as much as $70 million right. And this could be just the beginning for SpaceX’s Starshield project. The company advertises the project’s secure communications, but Starshield also aims to offer the military earth observation and hosted payload services.
SpaceX is already building a limited number of earth observation satellites (specifically for missile tracking) for the U.S. Space Development Agency, an arm of the Space Force. Technically, this isn’t part of the Starshield project yet.
But as the military begins operating these tracking satellites, and starts allocating further dollars to Starshield for communications services, it’s logical to assume that SpaceX’s earth observation activities will eventually be folded into the Starshield project.
It’s also logical to assume, if all goes well with both these preliminary exercises, that the military will begin ordering additional earth observation satellites from SpaceX, and perhaps some of these hosted payload services as well.
There are two primary conclusions for investors from all of the above. First and foremost: SpaceX is getting bigger, evolving and branching out into new areas of space work. This poses a challenge to incumbents that are already doing this kind of work — Maxar and Planet Labs in the field of earth observation, for example.
But it also means that SpaceX is developing new revenue streams for itself through Starshield and Starlink.
This is important to investors, even though SpaceX is still a private company, because for the last couple of years, Elon Musk has repeatedly stated his intention to offer an initial public offering (IPO) for Starlink once its revenue is growing predictably enough to attract investors. With $3 billion in civilian revenue annually already, and now tens of millions of dollars beginning to pour in from the military (and more on the way), it appears that Starlink is approaching that point. Thanks to Starshield, Starlink now looks like a bona fide IPO prospect.
Space and Time, a firm that describes itself as an AI-powered data warehouse, announced the launch of its Proof-of-SQL product on Aug. 2.
Proof-of-SQL is capable of proving that the data returned in applicable queries is accurate and has not been tampered with. This verification is accomplished through zero-knowledge (ZK) proofs, which generate a SNARK cryptographic proof-of-query execution within Space and Time’s decentralized data network.
Jay White, Co-Founder and Head of Research at Space and Time, said:
“We believe that data will enhance the interoperability between the on-chain and off-chain ecosystems, fostering greater collaboration between decentralized and traditional systems.”
White added that Proof-of-SQL can “unlock new levels of innovation, efficiency and user satisfaction” across many different industries including finance, retail, healthcare, gaming, and any area that makes use of blockchain.
The product can be used with both on-chain and off-chain data.
Space and Time noted that Proof-of-SQL is particularly useful in the financial industry, where monetary value has a direct relationship with data.
The company also described how Proof of SQL can be used in relation to artificial intelligence (AI). It said that the product can be used to verify that large language models (LLMs) are trained on accurate and tamperproof data. It said that this capability can ensure that AI is applied responsibly as it becomes more commonplace in business.
The firm additionally noted that, in the blockchain industry, developers can use Proof-of-SQL to create smart contracts and decentralized apps (dApps) which verify data without compromising the trustless security model of blockchain.
The company said that Lendvest, a Chainlink-powered protocol that uses on-chain credit scores, is one of the first projects to make use of Proof-of-SQL.
Space and Time was founded in 2022. It raised $10 million and $20 million in two separate funding rounds that year. As blockchain and AI technologies continue to evolve, Proof-of-SQL’s ability to provide data accuracy and integrity could play a significant role in the development of these sectors
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Mati Greenspan, founder of Quantum Economics and a leading cryptocurrency expert, has joined the advisory board of Copernic Space, a web3-based space marketplace transforming the access and interaction with space assets.
The partnership will involve Greenspan’s firm, Quantum Economics, in Copernic Space’s initiative to tokenize space assets. This is expected to revolutionize their accessibility to commercial, investor, and consumer markets.
Copernic Space collaborates with various space companies to tokenize space assets, capitalizing on blockchain technology to provide direct access to space assets. “Mati’s work with us will play a vital role in shaping the development of the financial space asset class using this technology,” said Grant Blaisdell, CEO of Copernic Space.
Greenspan opined, “Space is the first marketplace on Earth that will be built from the ground up with native blockchain infrastructure. Space may be the final frontier.”
The partnership, coupled with Quantum Economics’ recent acquisition of Revault Network, solidifies Copernic Space’s position in the evolving space economy and its dedication to enhancing space asset accessibility.
Post his stint at eToro, Greenspan launched Quantum Economics, a financial market advisory firm recognized for its detailed market analysis and investment opportunities. Recently, Quantum Economics acquired Revault Network, a DeFi platform, boosting its prowess in the decentralized finance domain.
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