WHAT GOES UP MUST COME DOWN —

After Astra loses 99 percent of its value, founders take rocket firm private

First you burn the cash, then comes the crash.

ERIC BERGER

- 3/7/2024

Enlarge / Liftoff of Astra's Rocket 3.0 from Cape Canaveral, Florida.
Astra60

Astra's long, strange trip in the space business is taking another turn. The company announced Thursday that it is going private at an extremely low valuation.

Four years ago, the rocket company, based in Alameda, California, emerged from stealth with grand plans to develop a no-frills rocket that could launch frequently. "The theme that really makes this company stand out, which will capture the imagination of our customers, our investors, and our employees, is the idea that every day we will produce and launch a rocket," Astra co-founder Chris Kemp said during a tour of the factory in February 2020

Almost exactly a year later, on February 2, 2021, Astra went public via a special purpose acquisition company (or SPAC). "The transaction reflects an implied pro-forma enterprise value for Astra of approximately $2.1 billion," the company stated at the time. For a time, the company's stock even traded above this valuation.

But then, rockets started failing. Only two of the seven launches of the company's "Rocket 3" vehicle were successful. In August 2022, the company announced a pivot to the larger Rocket 4 vehicle. It planned to begin conducting test launches in 2023, but that did not happen. Accordingly, the company's stock price plummeted.

Last November Kemp and the company's co-founder, Adam London, proposed to buy Astra shares at $1.50, approximately double their price. The company's board of directors did not accept the deal. Then, in late February, Kemp and London sharply cut their offer to take the company private, warning of "imminent bankruptcy" if the company doesn’t accept their new proposal. They offered $0.50 a share, well below the trading value of approximately $0.80 a share.Advertisement

On Thursday, Astra said that this deal was being consummated.

"Astra Space, Inc. announced today that it has entered into a definitive merger agreement pursuant to which the acquiring entity has agreed, subject to customary closing conditions, to acquire all shares of Astra common stock not already owned by it for $0.50 per share in cash," the company stated. The acquiring entity consists of Kemp, London, and other long-term investors.

Where Astra goes from here is anyone's guess. Rocket 4 is likely months or years from the launch pad. It faces stiff competition not just from established small launch players such as Rocket Lab and Firefly but also from new entrants as well, including ABL Space and Stoke Space. Additionally, all of these small launch companies have been undercut in price by SpaceX's Transporter missions, which launch dozens of satellites at a time on the Falcon 9 booster.

Additionally, Astra's spacecraft engine business—acquired previously from Apollo Fusion—may or may not be profitable now, but there are questions about its long-term viability as well.

"I don't fault management for seizing the opportunity to raise hundreds of millions of dollars by SPAC'ing, but a pre-revenue launch company without a proven rocket was probably never a good match for the public markets," said Case Taylor, investor and author of the Case Closed newsletter.

Taylor added that he hopes that Astra spacecraft engines find a way to thrive in the new Astra, as the space industry values their performance. "I hope to see that diamond survive and thrive," he said.