Why Astra Space Stock Just Dropped 10%

What happened

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.

Red stock arrow breaking up and showering down in pieces over a city below

Image source: Getty Images.

So what

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.

Now what

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.  

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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/

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