ASTR - Kerrisdale Capital short report rebuttal

Kerrisdale Capital issued a short report in December and here is why I believe they might have based their investment thesis on poor arguments. I believe their thesis is supported by two pillars: (1) Astra is young and unproven player in the launch/space market, (2) Astra’s approach to the market is uneconomical from a supply and demand perspective. I would mostly agree with (1) since Astra has only reached orbit once. But so is any new entrant in any market. However, their reasoning for (2) stems from some gaps in their understanding of the launch market (both supply/demand). Smallsat companies and aggregators (basically charters for small sats) will choose a launch provider based on 4 characteristics: Specifications (such as operational orbit, inclination, size and weight) Total Cost to Launch (they do not think of $/mass as most people seem to think - as does Kerrisdale) Timing (flexibility and frequency matching to their respective development schedule) Flight Heritage (as in success rate, legacy, etc.) About Specifications, Astra’s only limitation would be on size and weight. Out of 370+ launches in Q4 2021 about 90% were smallsats. This gives you an idea that for dedicated launches the sweet spot might be about 500kg (Smallsat category). Demand-wise, around 20-30’000 satellites are planned to be launched between now and 2027 (excluding Starlink). About Total Cost of Launch, Astra is the second cheapest launch provider in-service (I follow about 22 launch providers - see image below). SpaceX’s rideshare program is by far the cheapest, however you are more limited in both Specifications and Timing. Currently, the cheapest alternatives in-development in the US are bluShift Aerospace $1.8m for 30kg (expected launch in 2024) or Phantom Space $4m for 370kg (expected launch in mid-2023). About Timing, the dedicated approach, light ground vehicle and ground support equipment as well as the multiple spaceport approach seem to support a compelling offer from Astra. It also helps with reaching different orbits and inclinations. The launch license they received fully supports this. About Flight Heritage, this is were Astra’s offer currently fails. However, this is the case for any up and coming launch provider (see image below). This is something I would monitor in the next dozen launches. Next launch date is Wednesday 9th February or Thursday 10th February 2022, could be a signficant step towards proving success rate (Astra's current shortcoming from a customer perspective). I have a 15,000 shares. Good free resources to study the launch market: https://www.newspace.im/ https://brycetech.com/reports

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ASTR - Kerrisdale Capital short report rebuttal

bullish
Kerrisdale Capital issued a short report in December and here is why I believe they might have based their investment thesis on poor arguments.
I believe their thesis is supported by two pillars: (1) Astra is young and unproven player in the launch/space market, (2) Astra's approach to the market is uneconomical from a supply and demand perspective.
I would mostly agree with (1) since Astra has only reached orbit once. But so is any new entrant in any market.
However, their reasoning for (2) stems from some gaps in their understanding of the launch market (both supply/demand).
Smallsat companies and aggregators (basically charters for small sats) will choose a launch provider based on 4 characteristics:
  1. Specifications (such as operational orbit, inclination, size and weight)
  2. Total Cost to Launch (they do not think of $/mass as most people seem to think - as does Kerrisdale)
  3. Timing (flexibility and frequency matching to their respective development schedule)
  4. Flight Heritage (as in success rate, legacy, etc.)
About Specifications, Astra's only limitation would be on size and weight. Out of 370+ launches in Q4 2021 about 90% were smallsats. This gives you an idea that for dedicated launches the sweet spot might be about 500kg (Smallsat category). Demand-wise, around 20-30'000 satellites are planned to be launched between now and 2027 (excluding Starlink).
About Total Cost of Launch, Astra is the second cheapest launch provider in-service (I follow about 22 launch providers - see image below). SpaceX's rideshare program is by far the cheapest, however you are more limited in both Specifications and Timing. Currently, the cheapest alternatives in-development in the US are bluShift Aerospace $1.8m for 30kg (expected launch in 2024) or Phantom Space $4m for 370kg (expected launch in mid-2023).
About Timing, the dedicated approach, light ground vehicle and ground support equipment as well as the multiple spaceport approach seem to support a compelling offer from Astra. It also helps with reaching different orbits and inclinations. The launch license they received fully supports this.
About Flight Heritage, this is were Astra's offer currently fails. However, this is the case for any up and coming launch provider (see image below). This is something I would monitor in the next dozen launches.
Next launch date is Wednesday 9th February or Thursday 10th February 2022, could be a signficant step towards proving success rate (Astra's current shortcoming from a customer perspective).
I have a 15,000 shares.

Good free resources to study the launch market:
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