Merging company

Sidus Space Stock: a tiny stock of geospatial intelligence

Like market reports, reliable trade statistics are hard to come by. Somewhere between 0.00006% and 2.5% of companies reach the $1 billion mark. There’s an order of magnitude or two between those two numbers, but the message is nonetheless clear: the odds of becoming a billion-dollar hit are pretty darn high. Of course, there are plenty of successful companies of all shapes and sizes that never come close to this type of valuation, but generally these are not the ones the average investor would bet on. Better to take the 80-1 odds for Rich Strike to win the Kentucky Derby, if you just want to place a modest bet. But investors like what they like, and that includes a small space stock called Sidus Space (SIDU).

About Sidus Space Stock

Sidus Space is a 10-year-old spin-off from Craig Technologies, a private aerospace company founded in 1999 by Carol Craig. It’s worth mentioning that Craig was one of the first women eligible to fly combat aircraft in the U.S. Navy, not to mention the first active-duty female aviator in her squadron to serve as a Naval Flight Officer P -3C Orion. She is also an engineer who has participated in the design and development of cockpit systems for military aircraft. And she really is the face of Sidus Space, a company she funded until last year, raising a total of $18 million between a $3 million seed round in September and then an IPO in $15 million purse in mid-December. (To put that number into perspective, the median IPO size in 2021 was around $177 million.)

We are very impressed that this Cape Canaveral, Florida-based company has chosen to take the traditional route to public procurement rather than merging with a sspecial pgoal aacquisition vsbusiness (after-sales service). As we reported in our recent article on Astra Space Stock (ASTR), 10 out of 12 public companies handed the blank check to the bank in 2021 (although many settled for much less than the promised amount due to the high rate of redemptions by institutional investors). Craig said in an interview with SpaceNews that she briefly considered the idea but:

“I spoke with a few SPACs and people about it. First, the more I read about it, it just didn’t seem like something I wanted to be a part of. I wouldn’t say it’s not legit, but someone described it as going in the back door — or going in the side window, instead of going in the front door. entrance. I like transparency. I like the idea of ​​doing this from the start, as most people expect it to be done.

Carol Craig, CEO/Founder of Sidus Space

Respect. As retail investors, we place great importance on transparency, so let’s dive deeper into what Sidus Space does.

What does Sidus Space do?

The better question to ask is what Sidus Space will do in the future. Currently, the space company manufactures hardware for rockets and satellites, as well as autonomous underwater vehicles. They’ve been doing this for a while now, which leaves us wondering why they haven’t been able to increase their revenue. Customers include the usual US government agencies (i.e. NASA and the Department of Defense) and regular defense contractors (namely, Lockheed Martin and Bechtel). A highly publicized project concerns a platform for deploying satellites on the Iinternational Space Station (ISS) called SSIKLOPS (no matter the real name). Sidus actually looks like one of half a dozen private space companies acquired by Redwire Space (RDW) over the past two years to build a publicly traded space infrastructure company with no sign of significant revenue.

Sidus Space Past Performance
Until now, Sidus Space has been primarily a space design and manufacturing company. Credit: Espace Sidus

But Sidus Space has bigger ambitions. The company plans to add a major component of data services as a geospatial intelligence provider – 120 satellites by 2026. The provision of business or strategic intelligence using satellites, as well as other types of sensors space and land, quickly becomes crowded with competitors. There are already a number of publicly traded geospatial intelligence companies, and we have already invested in the largest on and off the planet.

Profile of LizzieSat

Sidus Space is taking a bullish view of the emerging geospatial satellite intelligence market by building and operating its own constellation of up to 120 satellites. These partially 3D-printed LizzieSat satellites can carry customer sensors and other technology for a fee, while collecting data for aviation, marine, weather, space services, intelligence, and space information. Earth observation, financial technology and the Internet of things.

Should you buy Sidus Space shares?

While the company certainly knows something about building hardware for space, operating a fleet of satellites and monetizing data is something else entirely. The first LizzieSat is actually slated to launch from the ISS later this year, putting Sidus Space far behind similar competitors like BlackSky (BKSY) and its dozen or so orbiting satellites or Spire (SPIR) and its vast data suite. and spatial analyses. solutions. Another manufacturer of small satellites, Terran Orbital (LLAP), is also turning to the geospatial intelligence sector.

Different types of geospatial intelligence markets.
Geospatial intelligence has applications in many different markets. Credit: Espace Sidus

Sidus Space is by far the smallest of these companies, with a market capitalization of just $25 million. It’s not a small cap, it’s a nano cap, a company with a market cap of less than $50 million. According to Investopedia, nanocaps are also very risky because “they are such small businesses and are especially prone to manipulation.” Meme stocks are just another name for companies manipulated by a herd of cheerleaders whose motives still remain unknown.

We do not invest in companies with a market capitalization below $1 billion, and Sidus Space is no exception. Here’s how they compare to other space names when it comes to size.

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The company’s market capitalization – $25 million – is about as much money as it made in the 10 years in business through 2021. The company’s latest quarter offered a little of hope for the future, with revenue rising from around $153,000 to nearly $1.8 million. It was about time, because the trend has not been their friend according to their leaked financial information.

Going in the wrong direction: Credit Nanalyze

Can anyone guess what the 2021 drop was caused by? That’s right Little Johny, The Rona. So I hope it’s over now. This raises the question of why this 10-year-old company has not been able to increase its revenue so far? “Ms. Craig’s accomplishments as a seasoned CEO include the following awards,” the company states. We would take $10 million in significant earnings on the awards any day.

Of course, none of this revenue is tied to the future constellation of small satellites. (Sidus thankfully spares us the SPAC-esque slideshow full of unrealistic revenue projections.) Instead, the money comes from payments on other contracts he won recently, including one with NASA worth over $5 million. Sidus Space still had around $10.5 million in the coffers at the end of Q1 2022, so based on net losses of around $2.3 million last quarter, the company likely has enough cash. to keep the lights on until the end of the year. Beyond that? Who knows, but dilution and/or debt could be part of the equation. Anyway, these are too small potatoes for us to fry.

At some point, all investors must draw a line and refuse to invest in companies that fall below a certain market capitalization threshold. As mentioned earlier, very small stocks gravitate toward manipulation for reasons that cannot be controlled. If no one knows your sacred cow, you might be tempted to pay for research. If your float is small, your stock price can easily be manipulated. Below you can see some recent tweets about Sidus Space that are a bit suspicious. A paid research firm is talking about an upcoming conference with Sidus, and this tweet is sandwiched between two bots touting a discord trading service that will help you navigate your way to a better ZIP code by speculating on shares of SIDU.

Credit: Twitter

More reasons why we would never touch a company this small, no matter how good its history.

Conclusion

There are plenty of cool companies doing cool things, but that doesn’t mean you have to invest in them. Sidus Space is a tiny company with a leader that has received a lot of accolades, but hasn’t been able to grow revenue so far. As they enter uncharted territory, they will encounter much larger competitors with more dough and domain knowledge in geospatial intelligence. Remember: no one can hear you scream in space. Whatever that means, we’ll pass Sidus Space stock and wish the company well.

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