Research Thread- Space Edition

In the Standard Lithium thread, we highlighted the need for a research themed thread to brainstorm on future picks. Probably a few good filters here: 1) no penny stocks, 2) above $100M market cap, etc.

I'm a mega bull on space stocks (long-term) as I think the market does not understand the massive decreases in launch costs coming (as far as $ per lb of payload) from Spacex's Starship rocket, which will make humans a multi-planetary species and really open up space to privatization. Who will benefit the most from drastically lower launch costs? Satellite companies, while other non SpaceX launch providers will probably be trapped in capex heavy, margin declining launch business (maybe there are a few that do OK in niches like the microsat launch market). If I had to invest in a publicly traded launch provider, I would choose RocketLab (on a dip post SPAC merger).

I was looking forward to Cathie Wood's ARKX space fund, but when it came out it had a bunch of non "true" space related stocks like John Deere and Netflix and then some crappy space stocks like SPCE and IRDM. So, I set about to make my own personal space fund. Below are the best picks I've found so far:

Spacemobile (ASTS)- working on developing first space based cellular broadband network accessible by mobile phone. Key risk event is launch of their BW3 satellite in March 2022. Probably one of the best asymmetric risk/reward bets in the market. If they succeed in their plan, they are probably a ~$500 stock by 2025 (I'd say 20% chance), while if they fail they are a $0 stock (let's say 80% chance to be conservative). Value those outcomes back to today's dollars in a DCF and you get an implied value closer to $50/share than the ~$11/share it's trading at currently. Market cap currently of ~$550M. It "deSPAC'ed" a few months ago and commons dipped all the way to $7, but has fought back to double digits with recent analyst upgrades. SPAC presentation here: LINK

Spire Global (NSH)- basically "SAAS in Space". Very focused on long-term customer development in multiple fields like climate, intelligence, etc. They focus on nanosats (football size) and have close to 200 currently in orbit. They manufacture their own satellites. Pretty low risk compared to other companies given their in house satellite production, small satellite size and cost, revenue historical growth, etc. Projected to do about $50M revenue in '21 (note- projections have been recently revised downward materially from their SPAC presentation given some customer delays). Currently a SPAC, merger vote is on August 13th. I'm expecting a dip to $7-8/share in the commons post merger, like many SPAC's are doing, and will load up then. Implied market cap of ~$1.6 billion (post SPAC). Spac presentation here: LINK

Maxar (MAXR)- Another satellite based data provider (somewhat similar to Spire but with larger satellites and less AI focused). Big risk event is Legion satellite launch (late 2021 or early 2022). Current market cap of ~$2.4B. Stock just got hammered last night on good earnings but a delay in their Legion launch, but I think it's at a great entry point right now as it has always bounced off the high $20's here recently. Another risk is that the company has a very high debt load. Revenues were ~$1.7B last year, so it has the lowest multiple of just about any space stock. Q2 earnings presentation here: LINK

Redwire (RDW)- Basically this is a "picks and shovels" play in space. Cash flow positive, and a holding company of several smaller sized companies. $119M revenue in '20. Lowest risk stock in this sector by far (post SPAC merger at least) and at a low implied multiple compared to most other space stocks (with exception of MAXR). SPAC merger expected later in Q3 this year, with a dip in commons like almost all other SPAC's have done possible as well. Valued at a ~$615M market cap (post SPAC). SPAC presentation here: LINK