Astra Likely To Be of the Biggest Beneficiaries of Cathie Wood’s ARK Space Exploration ETF (ARKX) as the Orbital Launch Company Plans To Go Public by Merging With the SPAC Holicity (HOL)
Astra, the company trying to make low Earth orbital missions more affordable, has been garnering quite a lot of attention lately as it gears up to go public by merging with the Special Purpose Acquisition Company (SPAC) Holicity Inc. (NASDAQ:HOL).
The market currently has a healthy appetite for space-based startups such as Astra. As an illustration of this phenomenon, Cathie Wood’s ARK Invest is about to launch a dedicated Space Exploration ETF, dubbed the ARKX. In a recent filing, ARK Invest described the objective of the ETF:
“The Adviser believes that Space Exploration Companies can be grouped into four overarching categories, each of which contains relevant sub-elements. Orbital Aerospace Companies are companies that launch, make, service, or operate platforms in the orbital space, including satellites and launch vehicles. Suborbital Aerospace Companies are companies that launch, make, service, or operate platforms in the suborbital space, including drones, air taxis and electric aviation vehicles. Enabling Technologies Companies are companies that create the technologies required for successful value-add aerospace operations, including artificial intelligence, robotics, 3D printing, materials and energy storage. Aerospace Beneficiary Companies are companies that stand to benefit from aerospace activities, including agriculture, internet access, global positioning system (GPS), construction and imaging.”
As is evident from the description above, Astra fits the investment objectives of the ARKX ETF. As one of the biggest asset management firms on the planet, with an AUM of over $50 billion, the components of ARKX are likely to see significant inflows. It is perhaps due to this realization that Holicity shares have been surging lately, with the stock registering a nearly 10 percent increase just yesterday.
As a refresher, Astra and Holicity are expected to merge in Q2 2021, with the deal valuing Astra at $2.1 billion. The transaction would furnish the combined company with $500 million in cash, including $200 million in PIPE investments. For those unfamiliar with Astra’s business model, the company has already demonstrated orbital capability. The company currently has over 50 launches in its backlog, representing over $150 million in contracted revenue. Astra aims to make low Earth orbital missions more affordable by hyperscaling launches, eventually aiming to provide daily, low-cost access to the orbit. The company’s rockets are designed for mass production, featuring an all-metal (Aluminum) construction. Astra’s entire launch system can fit inside 4 standard shipping containers and require only 6 employees at the launch site.
Astra expects to earn $67 million in revenue in 2022. By 2025, the company expects to rake in over $1.5 billion. Moreover, the company expects to become EBITDA positive by 2024.