Dear readers,
Welcome to Quartz’s newsletter on the economic possibilities of the extraterrestrial sphere. Please forward widely, and let me know what you think. This week: Back to the SPAC, SpaceX is building satellites for Space Force, and creating more opportunities for Black people in aerospace.
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Another venture-backed space start-up is going public through a special acquisition company, or SPAC—a publicly traded company that raises money to buy a private firm, often one perceived as too risky to go public through a traditional IPO or a direct listing.
It’s the same way Virgin Galactic became the first publicly traded human spaceflight company last year. As we’ve seen, a risky firm with a compelling story can also become a darling of individual investors.
This time around, the target is Momentus Space. The purchaser is a fund raised by Stable Road Capital that trades on the NASDAQ as SRAC, and will become MNTS in early 2021.
Momentus has developed a water-fueled propulsion system and vehicle called Vigoride to provide “last mile” transportation to satellites once they are launched into space on rockets. After test-flying a prototype in 2019, Momentus has lined up a partnership with SpaceX and signed contracts with small satellite operators, notably the internet-of-things play Swarm, to ferry their spacecraft to the right orbit.
The company is effectively a middleman—its backers call it a space infrastructure company—that enables SpaceX and other rocket makers to provide more flexible service, while allowing satellite operators to spend more time and resources on their spacecraft’s payload than on figuring out how to get it where it’s going.
The challenge is in the numbers. We’re still awaiting the official Momentus prospectus, but figures shared in an Oct. 7 investor presentation were eyebrow-raising. Stable Road values Momentus at $1.2 billion. The company forecasts $19 million in revenue next year, which means its valuation is 63 times its next-twelve-months revenue. Profitable, fast-growing software companies currently trade at an average of 16 times their forecast revenue.
The slides in the Momentus presentation suggest the valuation makes more sense compared to 2024 estimated revenues of $1.2 billion. But it’s still a generous prediction: The company currently has $90 million in booked business through 2022, and $1.1 billion under negotiations. If it wins all those contracts, it will still need to find an additional $780 million in total revenues through 2024.
Momentus also plans to use its new capital to add new business lines, flying payloads on its spacecraft for businesses that want to collect data in space without building a bespoke satellite, and providing refueling and other services to existing satellites.
The challenge is the competition it faces in all of these businesses. Rocket Lab, a leading small-satellite launcher, developed its own vehicle called the Photon, and Spaceflight, a launch broker that also works with SpaceX, is developing a “last mile” transit solution of its own. York Space Systems offers a generic satellite bus that customers can use to create “satellites as a service.” Northrop Grumman and Astroscale are developing specifically designed vehicles to re-fuel, repair, or move existing satellites.
Mikhail Kokorich, Momentus’ founder and CEO, replies to these concerns by noting that his company’s current vehicles and next-generation vehicles are larger and more powerful than those built by its competitors, and will benefit from working with a range of rockets, including many still under development. He also argues that the company’s propulsion system is more efficient and safer than those used by competitors.
“As long as we have a water-based propulsion system at the core of our technology and service offerings, and with our plans to scale our product line, Momentus will likely be the low-cost provider across the largest swath of the market—and will be able to provide services beyond what either York Space Systems or Rocket Labs are planning,” Kokorich wrote Quartz in an email.
Another counterpoint: Virgin Galactic has not hit any of the financial forecasts it made in its prospectus a year ago—it did not fly 66 people in 2020, and might earn $500,000 this year instead of $31 million. But the firm is currently valued by investors at $5.5 billion, some $4 billion more than the enterprise value proposed when it was acquired.
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IMAGERY INTERLUDE
Capella Space, a satellite radar start-up from San Francisco, has released its first images. The data was collected by Sequoia, Capella’s upgraded second satellite that was launched in Aug. 2020. This shows the Palm Jumeirah in Dubai at a 2 meter-per-pixel resolution, and you can even see the wakes left behind by boats moving through the water.
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Steve Jobs thought pivot tables were the “coolest thing ever.” There is no simpler way for the average person to summarize thousands of rows of data in just a few clicks. Our history and explanation of the tool will help you understand why. Read more in our field guide to navigating the data deluge. You’ll find more fascinating data points, a list of the most essential Covid-19 data resources, and tutorials on the four most important tools you need to fully understand a torrent of data.
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SPACE DEBRIS
Fixing aerospace inequality. Anyone paying attention knows the space industry has a problem attracting and encouraging Black workers. One step forward is the creation of the Patti Grace Smith Fellowship, a new program that will provide Black college students with paid summer internships at aerospace companies and link them to mentors, and is now accepting applications. The fellowship honors the late Smith, who integrated Jim Crow schools as a teenager before a career that culminated in a decade-long stint leading the FAA’s Office of Commercial Space. The program is based on the successful model of the Brooke Owens Fellowship, which works to expand opportunity for women in aerospace.
Too many sats? Here’s a first for those mulling the space traffic management challenge: Rocket Lab CEO Peter Beck says satellite proliferation is making it harder for his rockets to find a clear path to orbit.
Kill Chain connectors. The Pentagon’s Space Development Agency hired SpaceX to build four new satellites to track enemy missiles in order to shoot them down. SpaceX’s design is based on the satellites it developed for its Starlink internet network, but the firm has never sold a satellite to an outside customer before. The military was apparently impressed with the speed at which SpaceX can roll out the birds. Missile-tracking satellites aren’t easy to build; a previous attempt to do so ended as a poster child for dysfunction. If SpaceX succeeds in delivering a good product to the Space Force, legacy military satellite manufacturers better get ready for a shake-up.
The Starliner shuffle. NASA announced that Chris Ferguson, the former astronaut turned Boeing executive who helped design the company’s latest spacecraft, will no longer command its first crewed flight. Instead, veteran astronaut Barry Wilmore will join the flight, expected in early 2021, while Ferguson will continue leading the team that will prepare the crew for their mission. Ferguson said he had unspecified family obligations in the next year he did not want to miss.
SpaceX is still trying to get families out of Boca Chica. The rocket maker says it has made its final attempt to buy out the residents of the tiny Texas community where SpaceX is developing and testing its next generation Starship rocket. Some residents are refusing the company’s offers and say SpaceX’s warning that remaining in their homes is dangerous amounts to a threat.
Your pal,
Tim
This was issue 68 of our newsletter. Hope your week is out of this world! Please send valuation models for space SPACs, ideas to improve Black representation in aerospace, tips, and informed opinions to tim@qz.com.