Five days after completing its special purpose acquisition company (SPAC) IPO and becoming one of the first private space companies to become a publicly traded space company last week, Astra Space (NASDAQ:ASTR) is seeing gravity reassert its hold over the company’s share price today.
After leaping nearly 22% (at one point) on July 1, the day of its IPO, and continuing to rise into the holiday weekend, Astra shares are falling now — down about 9.5% as of 12:30 p.m. EDT on Tuesday.
Why is Astra stock down? There’s no actual news of note to explain the decline — and I’d say that’s probably good news for investors.
Moreover, at more than $14 a share even after today’s decline, Astra’s stock price still sits 14% higher than where it entered the public markets on Thursday.
All of that leads me to conclude that what we’re probably seeing here today is a simple case of post-IPO profit taking by investors who are cashing in on the success of the IPO. It’s short-term market turbulence, and not really something that should concern long-term investors.
Instead, my advice would be to focus on the fundamentals, and on the performance of the business. For example, Astra has no revenue today, it’s losing money ($215 million in net losses over the last 12 months) and burning cash ($40 million last year). That’s all bad, but the company did conduct a nearly successful orbital launch last year, and will again attempt to reach orbit later this summer.
The sooner it succeeds with that, the sooner it will be able to begin launching satellites, collecting revenue, and reducing its losses — and the sooner investors will get an idea of whether Astra can evolve into a profitable business.
This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.
View more information: https://www.fool.com/investing/2021/07/06/why-astra-space-stock-just-dropped-10/