Investing in Space: An eyebrow-raising SPAC

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Overview: A space SPAC is back

I’m wrapping up my time in Paris covering a pair of the biggest international space conferences, but an announcement back in the U.S. has been the cause of raised eyebrows and a bit of incredulity in several of my conversations the past few days.

Lunar tech-focused Intuitive Machines announced a SPAC deal last Friday at a near $1 billion valuation. It plays up both the civil and national security reasons for why everything from rovers to people are going back to the moon en masse this decade. Granted, NASA is pouring billions into returning to the lunar surface, and the Pentagon has issued repeated warnings about China’s ambitions. But concern about Intuitive Machines going public traces back to the market appetite for such deals, and the lofty projections the company would need to hit.

It’s worth understanding the broader factors at play: The SPAC frenzy ended even faster this year than it started last year. The companies that went public have, for the most part, seen their stock slammed by investors’ flight from risky and speculative assets – like capital-intensive and often pre-revenue space companies. Additionally, the SPAC market dried up this summer and even the “SPAC king” (who took Virgin Galactic public) this week decided to unwind two of his special purpose companies and return money to shareholders.

For Intuitive Machines, the money it aims to raise by going public is largely dependent on what the Inflection Point SPAC shareholders think of the deal. Inflection Point has $301 million held in a trust, which is dependent on shareholder redemptions. SPACs closing deals in 2022 have regularly seen requests to redeem much of that money, leaving less than expected on the newly public company’s balance sheet.

Additionally, SPAC projections have come under scrutiny and Intuitive Machines needs to find its stride quickly to hit its forecasts. Of the five business lines in the company’s presentation – Lunar Access Services, Lunar Data Services, Orbital Services, Space Products, and Space Infrastructure – four of them are expected to bring in revenue between $0 and $7 million this year. Compare that to two years out, when Intuitive Machines forecast each of the five will be bringing in $100 million in revenue or more.

But the deal has to close first – and that’s expected in the first quarter. I’ll keep an eye on this one as it looks to swim against the frozen river of the SPAC market.

What’s up

  • Planet will add hyperspectral satellites to its product line, called “Tanager.” At the International Astronautical Congress, CNBC caught up with Planet co-founder Robbie Schingler about the new offering, with a pair of Tanager demonstration satellites set to launch next year. – CNBC
  • Rocket Lab hosted an investor day in New York City, and gave updates on the progress of its Electron and Neutron rockets, as well as its space systems business. For Electron, the biggest announcement was that the long-anticipated first launch from Virginia’s Wallops is set to happen in December, and the company showed off early hardware and more details of Neutron for the first time. – Rocket Lab
  • ArianeGroup unveils project to create a reusable upper stage for Ariane 6 rockets. Called Susie (Smart Upper Stage For Innovative Exploration), the French rocket builder outlined the concept as a part of the rocket that would replace the nose cone and carry both cargo and crew – an approach that mimics SpaceX’s Starship at a smaller scale. – ArianeGroup
  • SpaceX is moving closer to the first Starship orbital launch attempt, the next major milestone in the prototype rocket’s development. In a tweet, Musk said that “November seems highly likely” for SpaceX to make the launch attempt. Company executives expected the flight to happen as early as summer 2021, but the target has slipped amid regulatory work and development delays. – @elonmusk 
  • Axiom Space signed an agreement with Turkey to launch the country’s first astronaut, and reportedly has a similar deal with Saudi Arabia. The company did not say when the Turkish astronaut will fly, but the reported agreement to fly a pair of Saudi astronauts on a SpaceX mission early in 2023. – Axiom / Reuters
  • Virgin Orbit announced an agreement with an Australian firm to open the country up for launching its rockets. The company said the agreement with Wagner Corporation will begin the process of adding a launch capability in Australia as early as 2024. – Virgin Orbit
  • Ookla’s Speedtest data shows slowing internet speeds for SpaceX’s Starlink users, but the service ranks as the fastest available around the world for people without access to terrestrial internet. – Ookla
  • Private space station Orbital Reef project, backed by Blue Origin and Sierra Space, to give awards to early-stage companies under “Reef Starter” challenge. The process is expected to select up to three startups from around the world, for up to $100,000 in awards, a spokesperson told CNBC. – Orbital Reef

Industry maneuvers

  • Rocket Lab secures lease at NASA’s Stennis center for engine testing, as well as capital backing from the Mississippi Development Authority. The company will have exclusive use of Stennis’ A-3 testing complex to develop its Archimedes engines for Neutron rockets. – Rocket Lab
  • SpaceX signs contracts to launch satellites for Arabsat, Satellite Vu. The deal with Arabsat would launch the 7A satellite on a Falcon 9 rocket, and is would be the third satellite SpaceX launches for the Saudi Arabia-based group. British thermal data collection company Satellite Vu signed its second contract with SpaceX, for a mission launching in early 2024. – Arabsat / Satellite Vu

On the horizon