3

You may have noticed that all of the world’s top billionaires are suddenly shooting off into space.

Literally.

Jeff Bezos has not only put $1 billion into the space industry, he’s planning to personally fly aboard a rocket into orbit.

Beyond that, Richard Branson poured at least $200 million of his money into his space company, Virgin Galactic.

Billionaire investor Ron Baron — who made 10 times his money on Tesla — holds a $432 million space-related investment of his own.

And of course, Elon Musk is charting his own course with SpaceX.

But if you’re looking to profit I’ve got some bad news for you...

None of these billionaires are going to share their space fortunes with you.

That’s why I’ve spent months researching the sector for the perfect stock — one that can help the average investor join the ranks of Bezos and Musk, and not just ride their coattails to some petty gains.

It’s called Astra (NASDAQ: ASTR), and it’s about to revolutionize the space business.

But before I explain exactly how it’s going to do that, let’s first get a firm idea about the market we’re poised to exploit for life-changing gains...

4

SPACE, SATELLITES, AND CONSTELLATIONS

We’ll start by exploring the broader space market — a $366 billion industry that will more than double in the next 10 years, to $805 billion, and triple in the next two decades to more than $1 trillion.

Now, if you want to know what that will look like, Morgan Stanley provides this visualization...

The important thing to note about this comparison is that red band on the 2040 chart. It represents internet satellites.

And while it’s completely absent in the 2016 layout on the left, it just about dominates the 2040 chart on the right.

This is where the bulk of space industry growth will occur, ultimately generating an estimated $412 billion.

5

Note that at more than $400 billion, that internet segment alone would eclipse the entire value of the broader space market right now ($366 billion).

How is that possible?

It’s because the nature of satellites and satellite launches is changing — and changing rapidly.

They are getting smaller and cheaper. They are getting easier to make and faster to deploy.

And that’s because there is a race among a small group of innovators to blanket the earth with a layer of communications satellites that are low enough to sustain internet connections.

These are called “low-earth orbit” satellites. Some weigh as little as one gram and hundreds can be deployed on a single rocket.

In fact, that’s just what SpaceX did in January when it deployed 143 low-earth orbit satellites in a single launch.

The deployment was so massive, it can be seen from earth (something the company is trying to remedy with a new dark coating).

6

With that level of coverage, these constellations can provide faster, more consistent access to the internet and other satellite services like broadband cable and digital communication — not just for SpaceX but for competitors like Jeff Bezos’s Blue Origin, internet service providers like Comcast, and telecom companies like AT&T and Verizon.

Forget cable. Forget fiber optics. The future of data infrastructure is literally swirling above your head.

It’s low-earth orbit satellite constellations.

It’s the dawn of a new space race.

And it’s going to culminate in the launch of thousands of satellites over the next few years — figures that up until recently would have been considered fantastic.

According to Euroconsult, 8,500 satellites will be launched from 2019–2028. That’d be more than the 8,378 satellites that were launched into space in the six decades prior.

With this vast increase in launch activity, there could be more than 12,000 satellites in orbit by 2028 — up from roughly 3,000 now.

Thus, the Morgan Stanley projection that internet space spending will blossom from nothing in 2016 to more than $400 billion in 2040.

Similarly, consumer broadband satellites will approach $100 billion from their nascent beginnings, and spending on digital cable satellites will just about double from $98 billion to $181 billion in that time.

So yes, space tourism, space mining, space exploration, data collection, and other forms of spending will contribute to the overall growth of the space market over the next few decades.

But more than anything else it will be low-earth orbit satellites and satellite constellations that will lead the way. That’s the market to key in on.

And that’s what brings us to Astra.

7

ASTRA: SPACE PIONEERS

Astra aims to conduct dozens if not hundreds of small satellite launches each year, ultimately performing them on behalf of clients daily.

You see, currently, if a company wants to launch a small satellite into space, it has to share a ride on a larger rocket with other satellite launchers, paying a fee proportionate to the weight and volume their unit takes up.

Sharing a ride with a larger satellite means they have no say in when the launch is commenced or where their satellites are placed in orbit. These outsized launch missions also take longer to set up and execute, which can mean months or even years of waiting for their satellites to be deployed.

“That’s the current state of the industry, and it sucks,” said Astra CEO Chris Kemp. “It’s like putting a FedEx truck on a plane and flying it to New York and then driving it back to Los Angeles, and then driving the truck off a cliff.”

Indeed, that’s the inefficiency Astra wants to do away with by offering small, targeted launches from a wide variety of locations.

8

Kemp (who was formerly the chief technology officer at NASA) plans to conduct three launches in 2021 and establish the ability to launch rockets on a monthly basis by year’s end. This would put the company on track for 15 launches in 2022, with the company targeting a weekly launch rate in 2023. That would mean 55 launches bringing in $206 million in revenue.

Astra then aims to triple that rate in 2024, with 165 launches and rockets going up twice a week. And by 2025, Astra wants to be launching almost daily.

This ambitious plan centers around Astra’s low-cost production and rapid-launch capabilities.

Kemp says you don’t need the equivalent of a Ferrari to carry a small payload to orbit, so his company isn’t building one.

“Honestly, we’re building a pretty boring rocket,” says Astra co-founder and Chief Technology Officer Adam London. “This is not about making the best, most sexy rocket. We want to make the simplest, most manufacturable rocket.”

9

So rather than rely on costly 3D printing or labor-intensive composites, Astra uses cheaper raw materials. For example, making the rocket’s fairing out of aluminum, instead of carbon fiber, reduces production time and cuts the cost of the fairing from $250,000 to just $2,500.

And whereas space rocket production has traditionally been complex, Astra is pursuing a revolutionary manufacturing process that relies heavily on automation.

“We’re going to automate the factory itself, so that we can get a consistent output of rockets,” Kemp said.

That effort is being led by Pablo Gonzalez, Astra’s senior vice president of factory engineering. Gonzalez previously led development of all of the equipment and automation lines in Tesla’s California and New York factories.

Now he’s doing the same for Astra as the company builds out its headquarters at what was once the Alameda Naval Air Station in California.

Over the past three years, Astra has developed the Bay Area site into the world’s first fully integrated rocket development, manufacturing, and test facility. The 20-acre campus with two indoor rocket engine test stands gives Astra’s team control over every part of the rocket-building process from design to testing.

It’s a proving ground in its own right, where the company can perfect its product and process.

Within its tightly controlled confines, Astra builds 95% of its rockets in-house using raw materials, manufacturing parts that would cost hundreds of dollars from a supplier for just $5 a piece.

Additionally, the company has developed its own software for everything from manufacturing to the launch systems.

The first stage of the facility is just about finished, but Astra will commence work on phase two of the facility next year. That work won’t be completed until early 2024, but once it’s done Astra hopes to realize its goal of producing rockets and conducting launches on a daily basis.

10

On that note, when it comes to the launch itself, that too is neatly streamlined and compact.

The company’s entire launch system can fit into four standard shipping containers, allowing it to be transported anywhere in the world within 24 hours. And it requires just six employees to operate the launch site.

In fact, in one demonstration for DARPA, Astra moved its entire rocket and launch infrastructure from their facilities in Alameda, California, to Kodiak, Alaska. It then set up all the equipment required to launch a rocket on a simple concrete launchpad and integrate a previously undisclosed set of payloads.

“All I need is a license from the FAA, we put a fence around a gravel pad, and we launch from there in five days with five people,” Kemp says.

With such threadbare requirements, the company should easily be able to scale out. It’s already identified more than 10 potential launch sites around the globe, all of which can be constructed in about six months.

To put that in context, such launch pads typically take between 18 months to five years to construct, but because Astra is working on such a small scale, it requires far less planning and infrastructure.

The availability of serviceable launch sites, short construction time, and streamlined process should make rapid expansion relatively easy.

Furthermore, this across-the-board cost-cutting and inherent efficiency will drastically reduce the cost of satellite launches — making them more economical through higher volume — and allow Astra to underbid its competitors.

Currently charging $2.5 million per launch, Astra is eyeing an even leaner $1 million per launch price point. By comparison, Rocket Lab, a close competitor, charges $7.5 million per launch.

Size, scale, adaptation, innovation.

11

Astra is moving fast.

Founded in October 2016, the company took just over four years to put its first rocket to space — a feat that took SpaceX three more years with five times the staff.

The company’s trademark expediency also applies to its customer base where it’s attracted double-digit customers, lined up more than 50 launches, and racked up $150 million in revenue.

Astra’s merger with Holicity via SPAC provided the company with an implied value of $2.1 billion.

This value includes $300 million held by Holicity from their IPO, an additional $200 million raised via a PIPE investment led by BlackRock at the SPAC IPO price of $10 per share, and a Series C funding round.

Said Kemp: “We convinced BlackRock, and a whole bunch of other conservative long-only investors, that the economics when you start manufacturing small rockets at scale pretty much cancel out what you get with a giant rocket. You get the same economics when you start making hundreds of rockets every year out of a factory.”

The company expects that it will require $450 million to achieve its initial buildout, which is less than what they’ve already raised from the SPAC merger.

12

Astra’s factory is already fully funded through to completion, meaning the company doesn’t have to rely on its operations to fund it.

And while delays and unexpected problems could eat into the company’s spare budget, there’s a fair amount of legroom (roughly $50 million) to work with.

Astra’s merger value of $2.1 billion represents a 1.4X multiple to its projected 2025 revenue, which is miniscule when compared to the broader industry.

Below is the company’s projected launch/revenue estimates from now until 2025.

Astra forecasts that it will conduct three launches this year, netting $4 million in revenue; 15 launches in 2022, generating $47 million; 55 in 2023, generating $206 million; 165 in 2024 for $619 million and turning cash flow positive; and 300 in 2025, topping $1 billion.

With the growth we’re seeing in the low-earth orbit satellite market that’s more than plausible.

13

And if Astra can master the efficiency it aspires to, and reach its technological goals, it will far outpace those numbers.

It’s a somewhat risky bet in a technologically challenging and highly competitive industry but it’s one I’m willing to take.

That’s why I’ve got (NASDAQ: ASTR) rated as a buy under $20.

SIDENOTE: SO WHAT IS A SPAC?

If you’re asking yourself why you’ve neve heard of this company before, it’s because it just came to market via SPAC.

A SPAC, or a special purpose acquisitions company, is essentially a shell company set up by investors with the sole purpose of raising money to acquire another company.

In this case it was a company called Holicity.

A SPAC like Holicity has no commercial operations or assets — just a pot of money that it raises from an IPO.

Once the IPO raises capital that money goes into an interest-bearing trust account until the SPAC’s management team finds a private company looking to go public through an acquisition.

If SPAC shareholders vote to approve the deal, the SPAC’s investors can either swap their shares for shares of the merged company or redeem their SPAC shares to get back their original investment, plus the interest accrued while that money was in trust.

SPAC sponsors typically get around a 20% stake in the merged and final company.

These vehicles have actually been around for decades but suddenly gotten a lot more popular over the past few years.

14

This is because a SPAC merger allows a company to go public more quickly, and often with less volatility than it would with a conventional IPO.

Again, this is because in a SPAC merger, the target company can negotiate its own fixed valuation with the SPAC sponsors.

In this case, Holicity officially became Astra in July. And it’s shot skyward ever since — already delivering gains to WSPG members whom I advised to buy-in prior to the transition.

Of course, that doesn’t mean you’ve missed out, because the greatest gains still lie ahead.

Fight on,

Jason Simpkins

Editor, Wall Street’s Proving Ground

Wall Street’s Proving Ground © Outsider Club 2021, 3 E Read Street, Baltimore, MD 21202. All rights reserved. No statement or expression of opinion, or any other matter herein, directly or indirectly, is an offer or the solicitation of an offer to buy or sell the securities or financial instruments mentioned. While we believe the sources of information to be reliable, we in no way represent or guarantee the accuracy of the statements made herein. Wall Street’s Underground Profits and Outsider Club do not provide individual investment counseling, act as an investment advisor, or individually advocate the purchase or sale of any security or investment. Neither the publisher nor the editors are registered investment advisors. Subscribers should not view this publication as offering personalized legal or investment counseling. Investments recommended in this publication should be made only after consulting with your investment advisor and only after reviewing the prospectus or financial statements of the company in question. Unauthorized reproduction of this newsletter or its contents by Xerography, facsimile, or any other means is illegal and punishable by law.