Investing in space: a SPAC that raises eyebrows

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Preview: A SPAC space is back

I’m wrapping up my time in Paris to cover two of the biggest international space conferences, but an announcement in the US has been the cause of raised eyebrows and a bit of disbelief in many of my conversations over the past few days.

Lunar technology-focused Intuitive Machines announced a SPAC deal last Friday at a valuation of nearly $1 billion. This underscores both the civil and national security reasons why everything from rovers to people are returning to the moon in droves this decade. True, NASA is paying billions to return to the lunar surface, and the Pentagon has issued repeated warnings about China’s ambitions. But the concern over Intuitive Machines’ IPO stems from the market’s appetite for such deals and the lofty projections the company is expected to achieve.

It’s worth understanding the broader factors at play: The SPAC frenzy ended even faster this year than it started last year. Companies that have gone public have, for the most part, seen their shares slammed by the flight of investors from risky and speculative assets – such as capital-intensive and often pre-revenue space companies. In addition, the SPAC market dried up this summer and even the “King of SPAC” (which took Virgin Galactic public) this week decided to break up two of its special purpose companies and return money to the shareholders.

For Intuitive Machines, the money it aims to raise by going public largely depends on what Inflection Point SPAC shareholders think of the deal. Inflection Point holds $301 million held in a trust, which depends on shareholder redemptions. SPACs making deals in 2022 have steadily seen requests to buy out much of that money, leaving less than expected on the new public company’s balance sheet.

Additionally, the SPAC projections have come under intense scrutiny and Intuitive Machines needs to find its stride fast to hit its predictions. Of the five business segments featured in the company’s presentation – Lunar Access Services, Lunar Data Services, Orbital Services, Space Products and Space Infrastructure – four of them are expected to generate revenues between 0 and 7 million dollars this year. Compare that to two years, when Intuitive Machines predicts each of the five will generate $100 million or more in revenue.

But the deal needs to be done first – and it’s expected in the first quarter. I’ll be keeping an eye out for this one as it appears to be swimming against the frozen river of the SPAC market.

What’s new

  • The hotel giant Hilton has signed up as a partner of the private Starlab space station, Which one is built by Voyager, Nanoracks and Lockheed Martin. In addition to designing hospitality suites and sleeping arrangements, Hilton will also work with the Starlab team to examine opportunities for marketing the space station and onboard astronaut experiences. – CNBC
  • Planet will add hyperspectral satellites to its product line, called “Tanager”. At the International Astronautical Congress, CNBC caught up with Planet co-founder Robbie Schingler about the new offering, along with a pair of Tangager demonstration satellites slated for launch next year. – CNBC
  • Elon Musk says SpaceX will ‘seek exemption’ from sanctions to provide Starlink service to 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 can reach around the world. – Reuters
  • Rocket Lab hosted an Investor Day in New York, and provided an update on the progress of its Electron and Neutron rockets, as well as its 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 off initial hardware and more details about Neutron for the first time. – Rocket Laboratory
  • ArianeGroup unveils the project to create a reusable upper stage for Ariane 6 rockets. Called Susie (Smart Upper Stage For Innovative Exploration), the French rocket builder described the concept as a part of the rocket that would replace the nose cone and carry both cargo and crew – an approach that mimics spacecraft smaller-scale spacecraft from SpaceX. – Ariane Group
  • SpaceX closes in on Starship’s first orbital launch attempt, the next major step in the development of the prototype rocket. In a tweet, Musk said “November seems very likely” for SpaceX to make the launch attempt. Company executives expected the flight to happen as early as summer 2021, but the target slipped due to regulatory work and development delays. – @Elon Musk
  • Axiom Space has signed a deal with Turkey to launch the country’s first astronaut, and reportedly has a similar deal with Saudi Arabia. The company did not say when the Turkish astronaut will fly, but the reported deal to fly a pair of Saudi astronauts on a SpaceX mission in early 2023. – Axiom/Reuters
  • Virgin Orbit has announced an agreement with an Australian company to open the country to the launch of its rockets. The company said the deal with Wagner Corporation will start the process of adding launch capability in Australia as early as 2024. – Virgin Orbit
  • Ookla’s Speedtest data shows slower internet speeds for SpaceX’s Starlink users, but the service ranks as the fastest available in the world for people without terrestrial internet access. – Ok so
  • Orbital Reef private space station project, supported by Blue Origin and Sierra Space, to reward start-up companies in the “Reef Starter” challenge. The process is expected to select up to three startups from around the world, for up to $100,000 in rewards, a spokesperson told CNBC. – Orbital Reef

Industry Laborers

  • Alternative rocketry developer SpinLaunch has raised $71 million in a fundraiser, to further develop its Kinetic Launch System, bringing the company’s total funding to $150 million to date. – spin launch
  • Rocket Lab gets lease to NASA’s Stennis Center for engine testing, as well as capital support from the Mississippi Development Authority. The company will have exclusive use of Stennis’ A-3 test complex to develop its Archimedes engines for Neutron rockets. – Rocket Laboratory
  • SpaceX signs contracts to launch satellites for Arabsat, Satellite Vu. The deal with Arabsat would launch the 7A satellite on a Falcon 9 rocket, and would be the third satellite launched by SpaceX for the Saudi Arabia-based group. The British thermal data collection company Satellite Vu has signed its second contract with SpaceX, for a mission launched in early 2024. – Arabsat / Satellite Vu

on the horizon

  • September 27 – Tentative date for NASA to launch the Artemis I mission. Awaiting official confirmation, but the timeline was dependent on the results of a cryogenic demonstration test on Wednesday, which the agency said had met all of its testing goals. – Nasa

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