Investing in Space: An eyebrow-raising SPAC

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Overview: A space SPAC is back

I’m capping my time in Paris by covering two of the biggest international space conferences, but an announcement in the US has raised eyebrows and some disbelief in some of my conversations over the past few days.

Lunar Tech-focused Intuitive Machines announced a SPAC deal last Friday at a valuation of nearly $1 billion. There are both civilian and national security reasons for why everything from rovers to humans are returning to the moon en masse this decade. Granted, NASA is pouring billions into returning to the lunar surface, and the Pentagon has repeatedly warned of China’s ambitions. But concerns about Intuitive Machines’ IPO stem from the market’s appetite for such deals and the lofty guidance the company would need to meet.

It’s worth understanding the broader factors at play: The SPAC frenzy ended even quicker this year than it started last year. Shares of companies that have gone public have suffered largely as investors have fled risky and speculative assets such as capital-intensive and often unprofitable space companies. Furthermore, the SPAC market dried up this summer and even the “SPAC King” (who took Virgin Galactic public) decided this week to liquidate two of its special purpose vehicles and return money to shareholders.

For Intuitive Machines, the money it plans to raise through the IPO largely depends on what Inflection Point’s SPAC shareholders think of the deal. Inflection Point has $301 million in a trust contingent on shareholder redemptions. SPACs closing deals in 2022 have received regular requests to repay much of that money, leaving less than expected on the newly listed company’s balance sheet.

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Additionally, SPAC forecasts have come under scrutiny, and Intuitive Machines must make rapid progress to meet its forecasts. Of the five businesses in the company’s presentation — Lunar Access Services, Lunar Data Services, Orbital Services, Space Products and Space Infrastructure — four are expected to generate between $0 million and $7 million in revenue this year. Compare that to two years, when Intuitive Machines forecasts that each of the five will bring in $100 million or more in sales.

But first the deal has to be closed — and that’s expected in the first quarter. I’ll keep an eye on this one as it looks like it’s floating against the frozen river of the SPAC market.

What works

  • The hotel giant Hilton has signed up as a partner for the private space station Starlab. which is built by Voyager, Nanoracks and Lockheed Martin. In addition to designing hospitality suites and bedding, Hilton will also work with the Starlab team to explore opportunities to market the space station and the onboard astronaut experiences. – CNBC
  • Planet will expand its product line to include hyperspectral satellites called “Tanager”. At the International Astronautical Congress, CNBC spoke to Planet co-founder Robbie Schingler about the new offering of two Tanager demonstration satellites due for launch next year. – CNBC
  • Elon Musk says SpaceX will ask for “a waiver” from sanctions to offer Starlink services in Iran. The potential request comes as Iranians face internet connectivity disruptions amid widespread protests in the country and as SpaceX continues to expand where its satellite internet network reaches in the world. – Reuters
  • Rocket Lab hosted an investor day in New York City, and provided updates on the progress of its electron and neutron rockets and space systems business. For Electron, the biggest announcement was that the long-awaited first launch of Virginia’s Wallops is set to take place in December, and the company showed early hardware and more details from Neutron for the first time. – Rocket Lab
  • ArianeGroup presents project to manufacture a reusable upper stage for Ariane 6 rockets. French rocket builder, by the name of Susie (Smart Upper Stage For Innovative Exploration), outlined the concept as part of the rocket that would replace the nose cone and carry both cargo and crew – an approach mimicking SpaceX’s spacecraft on a smaller scale. – Ariane Group
  • Axiom Space signed a deal with Turkey to launch the country’s first astronaut and reportedly has a similar deal with Saudi Arabia. The company didn’t say when the Turkish astronaut will fly, but the reported agreement to fly a pair of Saudi astronauts on a SpaceX mission in early 2023. – Axiom / Reuters
  • Virgin Orbit announced an agreement with an Australian company to open the country to launch its rockets. The company said the agreement with Wagner Corporation will begin adding launch capacity in Australia as early as 2024. – Virgin Orbit
  • Ookla’s Speedtest data shows internet speed slowdown for SpaceX’s Starlink users, but the service is said to be the fastest available in the world for people without access to the terrestrial internet. – Okay
  • Private Space Station Orbital Reef project supported by Blue Origin and Sierra Space to provide awards to early stage companies as part of the Reef Starter challenge. The process is expected to select up to three startups from around the world for up to $100,000 in prizes, a spokesman told CNBC. – Orbital Reef

industry maneuvers

At the horizon

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