Just when we thought SPAC in space business is on a rapid decline, space exploration company Intuitive Machines, last week announced its plan to list on Nasdaq through a merger with Inflection Point Acquisition Corp.
Does it mean the tough run is over for the space companies?
Not if we go by the numbers.
This year, till date, only two SPACs have been successfully closed — Terran Orbital and Satellogic. While many stand cancelled.
Last month, D-Orbit, an Italian space logistics company, terminated its plans to go public through a merger with Breeze Holdings Acquisition Corp. The reason they gave for this change of heart was “the financial markets have changed substantially”. In March, Tomorrow.io, US-based weather satellite company, decided to go against its merger plan with SPAC vehicle Pine Technology Acquisition Corp. Notably, again “due to market conditions”.
The Promus Ventures New Space Index, which jumped briefly in August, has since turned in a lacklustre performance – currently down minus 4.9% as compared to Nasdaq (minus 0.9%) and S&P500 (minus 0.7%).
In a nutshell, it can be said that most space companies that went public last year through SPAC deals are struggling as second quarter results came in. “Off 50% or more since their market debut,” noted CNBC.
So, what really went wrong? Is it the fears of a global economic recession, market unpredictability, a spate of bad timing and luck, or something particular to the space sector?
It’s probably a mix of everything. Apart from a handful of companies such as Planet and Rocket Lab, most have turned in disappointing results so far. Furthermore, none of the newly listed companies have yet managed to rise above the USD 10 pro forma share price used by SPACs.
To be fair, this trend is not an isolated case with the space companies. In a volatile stock market, several other high-profile SPACs are either left stranded, or struggling to find target companies to acquire, or have themselves pulled the plug on agreed deals.
Pitchbook data reveals that shares of most companies that went public through SPACs in the past two years are down 45% so far. SEC’s announcements for forthcoming tougher regulations and a tighter monetary policy by the Feds haven’t helped either.
However, the run is expected to get particularly tougher for the space industry given how heavily regulated the sector is. Then there are licensing issues – satellite and space companies require licenses from several regulatory bodies, including Federal Communications Commission (FCC), the Federal Aviation Administration (FAA), and the National Oceanic and Atmospheric Administration (NOAA).
Information sensitivity, and technology confidentiality is another issue. In many cases, space companies deal with classified components.
Intuitive Machines will probably be an outlier this year. And a lucky one, if it manages to close the SPAC merger.
As the United States plans its return to the Moon after 50 years, the excitement around the mission may prove to be a decisive factor here. Intuitive is developing advanced space technologies including propulsion systems, lunar mobility vehicles, power plants, and human systems.
Incidentally, Intuitive’s Founder and Executive Chairman Kam Ghaffarian is also the Co-Founder Axiom Space, which has been in the news for its ambitious plans to build the first commercial space station in Low Earth Orbit.
But certainly, this isn’t a trend-setter for a SPAC run in the space sector. At least not for some time to come.
Disclaimer: Views Expressed are Author's Own. Geospatial World May or May Not Endorse it
