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Investing in House: An eyebrow-raising SPAC

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Overview: An area SPAC is again

I am wrapping up my time in Paris overlaying a pair of the largest worldwide house conferences, however an announcement again within the US has been the reason for raised eyebrows and a little bit of incredulity in a number of of my conversations the previous few days.

Lunar tech-focused Intuitive Machines announced a SPAC deal last Friday at a near $1 billion valuation. It plays up both the civil and national security reasons for why everything from rovers to people are going back to the moon en masse this decade. Granted, NASA is pouring billions into returning to the lunar surface, and the Pentagon has issued repeated warnings about China’s ambitions. But concern about Intuitive Machines going public traces back to the market appetite for such deals, and the lofty projections the company would need to hit.

It’s worth understanding the broader factors at play: The SPAC frenzy ended even faster this year than it started last year. The companies that went public have, for the most part, seen their stock slammed by investors’ flight from risky and speculative assets – like capital-intensive and often pre-revenue space companies. Additionally, the SPAC market dried up this summer and even the “SPAC king” (who took Virgin Galactic public) this week decided to unwind two of his special purpose companies and return money to shareholders.

For Intuitive Machines, the money it aims to raise by going public is largely dependent on what the Inflection Point SPAC shareholders think of the deal. Inflection Point has $301 million held in a trust, which is dependent on shareholder redemptions. SPACs closing deals in 2022 have regularly seen requests to redeem much of that money, leaving less than expected on the newly public company’s balance sheet.

Additionally, SPAC projections have come under scrutiny and Intuitive Machines needs to find its stride quickly to hit its forecasts. Of the five business lines in the company’s presentation – Lunar Access Services, Lunar Data Services, Orbital Services, Space Products, and Space Infrastructure – four of them are expected to bring in revenue between $0 and $7 million this year. Compare that to two years out, when Intuitive Machines forecast each of the five will be bringing in $100 million in revenue or more.

But the deal has to close first – and that’s expected in the first quarter. I’ll keep an eye on this one as it looks to swim against the frozen river of the SPAC market.

What’s up

  • 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, with a pair of Tanager demonstration satellites set to launch next year. – CNBC
  • Elon Musk says SpaceX “will ask for an exemption” from sanctions to provide Starlink service in Iran. The potential request comes as Iranians face disruptions to internet connectivity amid widespread protests in the country, and while SpaceX continues to expand where its satellite internet network can reach in the world. – Reuters
  • Rocket Lab hosted an investor day in New York City, and gave updates 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-anticipated first launch from Virginia’s Wallops is set to happen in December, and the company showed off early hardware and more details of Neutron for the first time. – RocketLab
  • ArianeGroup unveils project to create a reusable upper stage for Ariane 6 rockets. Called Susie (Smart Upper Stage For Innovative Exploration), the French rocket builder outlined the concept as a part of the rocket that would replace the nose cone and carry both cargo and crew – an approach that mimics SpaceX’s Starship at a smaller scale. – ArianeGroup
  • Axiom House signed an settlement with Turkey to launch the nation’s first astronaut, and reportedly has the same take care of Saudi Arabia. The corporate didn’t say when the Turkish astronaut will fly, however the reported settlement to fly a pair of Saudi astronauts on a SpaceX mission early in 2023. – Axiom/Reuters
  • Virgin Orbit introduced an settlement with an Australian agency to open the nation up for launching its rockets. The corporate stated the settlement with Wagner Company will start the method of including a launch functionality in Australia as early as 2024. – Virgin Orbit
  • Ookla’s Speedtest knowledge reveals slowing web speeds for SpaceX’s Starlink customers, however the service ranks because the quickest accessible around the globe for individuals with out entry to terrestrial web. –Ookla
  • Non-public house station Orbital Reef mission, backed by Blue Origin and Sierra House, to offer awards to early-stage firms underneath “Reef Starter” problem. The method is predicted to pick out as much as three startups from around the globe, for as much as $100,000 in awards, a spokesperson instructed CNBC. – Orbital Reef

Business maneuvers

On the horizon

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