• Mon. Aug 15th, 2022

SPACs in space are expected to recover in 2022

ByRoman Frąckiewicz

Jan 4, 2022

In 2021, space companies grew their businesses through mergers with SPACs (special purpose acquisition corporations), but many owners were left underwater by the end of the year. All but one of the nine space firms which went public via SPAC mergers in 2021 completed the year with their shares trading at a lower price than when the mergers closed. Only Rocket Lab began the year with a share price that was higher than when the merger was completed, up 6% since late August.

In many situations, the reduction in share price was considerable. BlackSky, Momentus, and Spire all finished the year with losses of more than 60% from when they first went public, with Spire losing nearly two-thirds of its value. Even Virgin Orbit, which went public on December 30, concluded the year with a 13 percent loss following a strong drop on December 31.

The decreases in these businesses were caused by a variety of factors. Planet, which began trading on December 8, plummeted after the company revealed in a quarterly earnings call on December 13 that three thrusters on one of their SkySat high-resolution imaging spacecraft had failed, decreasing its lifetime. Redwire Space’s stock has been continuously declining since the company postponed the presentation of quarterly financial data in early November due to “possible accounting difficulties at a business component” that the company has yet to completely explain or resolve.

These publicly traded companies’ poor performance comes as corporations have recently struggled to attract huge quantities of capital through SPACs. After a high proportion of redemptions from SPAC NextGen Acquisition Corp. II stockholders, Virgin Orbit collected just under half of $483 million originally predicted from its merger with SPAC NextGen Acquisition Corporation II. While the SPAC was expected to offer up to $383 million, it ended up contributing only $68 million of $228 million raised after shareholders demanded their money back.

Despite confidence expressed by business management last month, Satellogic, which announced a SPAC transaction in July, has been straining to conclude the merger. CF Acquisition Corp. V, the SPAC uniting with Satellogic, postponed a shareholder vote on the acquisition for the third time on December 30, citing the need for more time to negotiate with a potential partner for additional finance, possibly as a hedge against high SPAC shareholder redemption rates. The voting has been postponed until January 24.

This comes after a decline in interest in the SPAC deals since early 2021. During a discussion panel at the World Satellite Business Week on December 13, Dominique Cahu, co-head of Morgan Stanley’s Europe, Middle East, and Africa media and communications, said, “In 2021, the first quarter was quite hot.”

Leave a Reply

Your email address will not be published.