Jason Simpkins has an “IPO Opportunity” ad circulating these days for his Wall Street’s Proving Ground newsletter — that’s letter which carries an entry-level price, usually offered at $49 for the first year, but it has been fairly specialized… it used to focus on defense-related investments, but has branched out a bit of late, mostly into little technology stocks. The story they’ve loved to tell the most over the past few years has been about VSBLTY (VSBY.CX, VSBGF), and that stock has done pretty well if investors bought it at during some fo the darker days in the past couple years, so what’s he teasing now?

Well, the short answer is “rockets” — Simpkins is pitching a new satellite delivery company, and he says it’s beating the competition when it comes to price and speed, as the sky fills up with little satellites. Here’s the intro to the pitch, which starts with a blurred out photo of some of the executives at this company:

“*Due to the sensitive nature of this story, our legal team advised us to blur these professionals’ faces. When you see what’s behind all this, you’ll understand why….

“They all used to hold top-level positions at some of the hottest tech companies on the planet… Apple, Amazon, SpaceX, and Tesla.

“But they walked away.

“Why?

“Because they all know the next BIG thing is on the horizon…

“And they want to be a part of it.

“So these elite players quit their high-pay, high-prestige jobs and all secretly joined the same little-known start-up.”

I don’t want to let the cat out of the bag too early here, but that’s a little silliness — all the high profile people who have joined this company either as executives or on the Board of Directors, many of whom do have experience at high-profile tech companies or space companies, have their photos plastered all over the company’s presentations and website. Nobody’s trying to keep any secrets here, that’s just Simpkins or his ad copywriter trying to create an aura of mystique, convincing you that only he has the secret knowledge about this company.

Don’t worry, we’ll get to our answers in a minute — first let’s see what Simpkins says about the business… here’s a bit more from the tease:

“Its nondescript headquarters just outside of Alameda, California, doesn’t give you a clue that something revolutionary is going on inside…

“And only a handful of experts are privy to what its engineers are developing inside these bizarre-looking facilities…

“Yet this company is expected to reach a $2.1 billion valuation in the coming weeks… and this is just the beginning. Because this company is perfectly poised to create…

“Extraordinary Riches From the Birth of a Massive New Industry”

And again, I don’t want to jump the gun here, but this ad was first written a little while back — the company has gone public, through a SPAC merger, the deal was complete several months ago, and the market cap is right around $2 billion now.

As I look back through my email archives, I see that Jason Simpkins has been pitching this stock for several months now, using similar language and a variety of headlines, but often focusing on how “Elon Musk got dumped” for this company — it looks like his first pitch hit us on July 22, when the shares were around $9, but it’s been touted every few weeks as the stock bounced around from $12 to $8 over the past six months. It’s near $8 again now, so might it be appealing? I didn’t write about any of those earlier teases, but, at least so far, we haven’t missed anything.

Like many of the teases for “space stocks” over the past couple years, a lot of the ad is about how to get in on the early days of a brand new industry…

“This $2.7 Trillion Opportunity ‘Could Save Humanity’

“Experts agree that the mass adoption of this new technology will have a huge impact on our everyday lives…

“Industry insider Will Whitehorn explains, it will ‘kick-start [an] industrial revolution.’

“Ars Technica says it is ‘the next big thing.’

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“And the World Economic Forum even predicts this new industry ‘could save humanity.’

“Now, before you start guessing…

“I’m talking about the space industry.”

And he says this particular stock is not a vanity project for billionaires, and not focused on space tourism, but has a practical plan…

“This is about a legitimate, money-making space industry that could reward early investors handsomely within a few months.

“As you’ll find out today, the all-star team behind it is using the exact same approach that helped Apple become a $2 trillion company.

“This opportunity has the potential to turn every $1,000 into $90,330….

“I predict this little-known start-up that’s about to explode onto the scene will beat SpaceX and Blue Origin at their own game.”

I’ll spare you too much more of the details from the ad, but, as I mentioned, it’s a rocket company — he sums up the basic business here:

“More than 12,000 satellites could be in space by 2028 — up from about 3,000 today.

“We’re looking at a huge supply-demand gap…

“And this company from Alameda is perfectly positioned to fill this gap.

“Its mission is to provide the first daily space delivery service in history.

“This firm builds rockets faster than anyone else in the industry…

“Its rockets are 50 times smaller and it builds 50 times more of them.”

And with some of the executives coming over from Apple, Simpkins emphasizes that they’re following the Apple model to move fast and develop products efficiently…

“Using the same three-tiered strategy Apple perfected.

“This unique three-part strategy is about: vertical integration, rapid iteration, and extreme specialization.”

We even get the fun news that this company was so successful in meeting a launch challenge from DARPA that they shamed Richard Branson into dropping out of the competition with his Virgin Orbit project, making our secret stock the only finalist.

More clues? OK, fine, we’ll skip to the end — that’s an embarrassment of riches already. Thinkolator sez this is a tease to buy Astra Space (ASTR), which went public through a SPAC merger with Holicity earlier this year and is indeed a $2 billion vertically integrated rocket/satellite launch company, with headquarters and manufacturing at the former Naval Air Station in Alameda, California. They won that DARPA challenge in March of 2020, when the world was distracted by other things (though they got a nice profile from Bloomberg going into that), and they have been very fast to get to first launch, developing that first rocket in only four years. This is how they describe themselves:

“Astra’s mission is to improve life on Earth from space by creating a healthier and more connected planet. Today, Astra offers the lowest cost-per-launch dedicated orbital launch service of any operational launch provider in the world. Astra delivered its first commercial payload into Earth orbit in 2021, making it the fastest company in history to reach this milestone, just five years after it was founded in 2016. “

The valuation isn’t going to make sense here for this brand new company for a while, though they did say back in February that they had a $1.2 billion pipeline, with more than 50 launches in their order backlog (and $150 million in “contracted revenue”)… and they do have a lot of people with impressive pedigrees, the founders are both from NASA, but the other high-profile team members include two leaders of their advanced projects and manufacturing from SpaceX, and a few recent hires from Apple, Tesla and Blue Origin. Their Board is perhaps more impressive, including Mike Lehman from Arista Networks (and Sun before that), and the always interesting cellular billionaire Craig McCaw.

The original plan, per the SPAC deal presentation in February, was for monthly launches in 2022 accelerating to weekly launches in 2023, hitting that “daily launch” goal in 2025 after scaling up their factory and spaceport capacity for that workload. The plan, as with pretty much every SPAC, is for the cash raised in the SPAC deal to see them through to profitability, with no further need for bit capital expenditures. I don’t know if that’s how it will really work out or not, it’s wise to be skeptical of five-year SPAC projections, it’s hard to know whether they can really cut the cost per rocket in half in two years, or increase their production capacity 10X by next year, but it looks good on paper.

There have been no big picture updates since the original SPAC presentation, they have gotten two launches done in the past year — including their first commercial launch last month, and a third one is scheduled for January (both of those for the government), and the latest Investor Presentation (December 2021) still claims the same $150 million backlog and $1.2 billion pipeline (the transcript for their last conference call is here, if you want more detail). This is all about the proliferation of very small satellites in low earth orbit (LEO), so we’re talking about satellites that cost a couple hundred thousand dollars and orbit about 500 miles from earth, not the hulking beasts that are out in geostationary orbit 10,000 or 20,000 miles away and cost hundreds of millions of dollars to build and launch.

Astra just redeemed its warrants, so they won’t have that warrant dilution hanging over the heads of their shareholders in the future… and analysts are penciling in solid revenue growth as they scale up, from almost nothing this year to $43 million next year and $185 million in 2023, both of which are meaningfully short of their initial SPAC presentation estimates ($67 million and $256 million, respectively), but still pretty solid. And optimistic, since this is a business that’s building up from nothing very quickly. They still have $379 million in cash as of the end of September, so I guess there must not have been too many redemptions when the SPAC deal went through (it was originally planned that they’d have $489 million in cash when the deal closed in July, and presumably they also spent some in those first couple months), so they’re starting off in pretty decent shape here. I’ll keep an eye on Astra, it might be one that I’ll be tempted to invest in as they make some progress — if only because they seem to have some great folks in leadership roles, and, if I’m being honest, probably mostly because Craig McCaw came onto the board as part of the SPAC deal and remains a major shareholder.

There are a lot of hopeful space companies, and the business plans that make the most sense to me are the ones that involve selling data from big constellations of LEO satellites, whether that’s Planet Labs (PBC) or BlackSky (BKSY) or Spire Global (SPIR), all of which also went public this year through SPAC mergers (and I’m probably forgetting at least a couple), but someone’s got to launch all those satellites and Astra has a pretty appealing plan to build out that capacity. There’s going to be a lot of competition as prices come down, and we may find all of these companies failing to make commercial traction in the next few years, but the winners might end up winning a lot. Just like we saw with cellular technology or the internet, I think there’s a pretty good chance that space-based data becomes so critical to business in a few years that we wonder how we ever got along without it. Should be interesting times… I don’t think we have to rush to chase each one of these hopefuls, particularly as the huge wave of new SPAC merger companies washes through the market, but I expect I’ll end up buying a few interesting ones at some point.

That’s just my take, though, and I haven’t risked anything in this space just yet — what’s your call? Ready to bet on space? Want to buy into services, or rocket launches, or satellites, or data providers? Have any favorites, whether that’s Astra or anyone else? Think it’s too early, or too late? let us know with a comment below. Thanks for reading!

Disclosure: Among the companies mentioned above, I own shares of Amazon. I will not trade in any covered stock for at least three days after publication, per Stock Gumshoe’s trading rules.