Vying to Keep Nasdaq Listing, Astra Space Looks to Conduct Reverse Stock Split and Raise $65 Million
Astra Space (Nasdaq: ASTR) recently announced that it will attempt to raise up to $65 million to fund its operations and conduct a reverse stock split, a financial maneuver that essentially involves consolidating existing shares into a smaller number of higher-priced shares, in order to avoid getting delisted from the Nasdaq exchange.
Astra has entered into an agreement with Roth Capital Partners to sell up to 50 million shares of Class A common stock, according to documents filed with the Securities and Exchange Commission (SEC). The company needs the funding to continue developing its new launch vehicle and producing rocket engines for sale to other companies.
In May, Astra reported zero revenue and a $44.9 million net loss for the first quarter of 2023 amid dwindling reserves of cash and securities and “substantial doubt” about the company’s survival. The company had a net loss of $411 million last year.
Astra ended the first quarter with $62.7 million in cash, cash equivalents, and marketable securities. Cash and cash equivalents totaled $16.8 million with $45.9 million in marketable securities.
Astra Space’s reverse stock split
In June, Astra Space announced it would conduct a reverse stock split at a ratio ranging from 1-for-5 to 1-for-15 in order to raise its stock price to $1.00 by October 2. In a reverse stock split, a company will attempt to drive up its stock price by combining its existing shares, dividing the total number of shares by the given ratio, but adding each share’s value together. This results in fewer, higher-priced shares.
Last October, Nasdaq gave the company 180 calendar days to raise its stock price to $1.00 for 10 consecutive business days. In April, the stock exchange gave the company an additional 180 days to raise its share price, hence the new October deadline.
The stock closed at $0.38 on Wednesday (July 12).
A bumpy road to orbit
Astra was founded as Ventions in 2005. The San Francisco-based company conducted research and development activities with funding from NASA and the Defense Advanced Research Projects Agency (DARPA). Ventions was reincorporated as Astra Space in 2016.
Astra’s primary focus has been the development of launch vehicles capable of delivering small payloads into orbit at very low costs. In 2018, the company conducted suborbital launches of its Rocket 1 and Rocket 2 vehicles. Astra said the launches were successful, but other sources claimed they failed.
Astra conducted seven launches of its Rocket 3 booster family from 2020 to 2022. The launch vehicle was designed to launch 55 to 331 pounds (25–150 kg) to a 311-mile (500 km)-high sun-synchronous orbit (SSO).
Only two of the flights were successful; the other five failed. Another rocket was destroyed on the pad prior to launch by a fire.
The booster’s final launch failure destroyed two NASA TROPICS (Time-Resolved Observations of Precipitation structure and storm Intensity with a Constellation of Smallsats) satellites on June 12, 2022. Astra had a contract to launch six TROPICS satellites on three launches.
Astra Space announced in August 2022 that it was retiring the failure-prone Rocket 3 booster. Instead, the company would focus on developing its larger Rocket 4 booster. The new booster will have a payload capacity of 1,102 pounds (550 kg) to a 186-mile (300 km)-high low Earth orbit, or 772 pounds (350 kg) to a 311-mile (500 km)-high SSO. Astra has said it plans to conduct the first Rocket 4 flight in 2023.
NASA canceled Astra’s final two TROPICS launches and awarded them to Rocket Lab. The remaining satellites were launched on a pair of Electron boosters in May 2023. NASA said it would launch other payloads on one of Astra’s Rocket 4 flights.
Astra Space has since moved to diversify its product line. The company acquired spacecraft propulsion manufacturer Apollo Fusion in June 2021 for $30 million in stock and $20 million in cash. Astra has also announced contracts to supply satellite propulsion systems to Apex Technology, Astrocast, Airbus OneWeb Satellites, and LeoStellar.
Last month, the company created a subsidiary, Astra Spacecraft Engines, as part of a corporate restructuring. TechCrunch reports that the change was made to separate Astra’s rocket and spacecraft component businesses. Rocket engine exports are governed by the strict International Traffic in Arms Regulations, while spacecraft components are governed by Export Administration Regulations. TechCrunch said Astra might also take out loans against its new subsidiary to address its financial challenges.
