2024 might be the year space stocks break through years of shakiness and pre-revenue indecision. Already, we’re seeing major companies like SpaceX, Rocket Lab USA (NASDAQ:RKLB), and AST SpaceMobile (NASDAQ:ASTS) rack up win after win. We’re even seeing companies like Amazon (NASDAQ:AMZN) enter the space race through its Kuiper Systems initiative.
But, though space stocks are shaping up to be a $1 trillion industry, don’t let the past few years’ worth of market observations make you think every space stock is destined for the stratosphere. Recall, of course, stinkers like Virgin Galactic (NYSE:SPCE), a Branson venture that even he wants no part of today.
Unfortunately, these speculative space stocks are ones to sell. Unlike the first few space stocks listed, these three have limited long-term viability and crippling cash problems. And that could mean they may not make it through 2024 unscathed.
Sidus Space (SIDU)
Sidus Space (NASDAQ:SIDU) closed 2023 with a massive reverse split to prevent delisting. That is rarely a good sign for long-term prospects. Has any pre-revenue company ever successfully pivoted after a reverse split?
After shoring up its per-share pricing, Sidus did the next logical thing. It offered new equity at the reverse split pricing that dilutes shareholders, sending the already-struggling stock down further.
But, to be fair, that’s all financial engineering of one type or another. How does the actual company’s operational outlook fare?
Not good.
After missing multiple targeted launch dates, Sidus seems ready to launch its first LizzieSat micro-satellites into space around March. The micro-satellites offer a range of sensors and data aggregation for sectors as diverse as “defense, agriculture, maritime, and oil and gas.”
The problem here, of course, is that (even if successful) – so what? Plenty of active and viable companies offer the same or sufficiently comparable services. And, as companies like Rocket Lab USA and Planet Labs (NYSE:PL) accelerate their own launch schedule, there’s little need for another upstart struggling to offer already-existing products and platforms. That, combined with its cash-strapped status, makes Sidus a top space stock to sell ASAP.
Momentus (MNTS)
Like Sidus, Momentus (NASDAQ:MNTS) executed a reverse stock split in 2023. It was their attempt to shore up per-share pricing and prevent delisting. And, like Sidus, it seems as though it won’t help much in the long run.
Momentus started 2024 with a bang, albeit one that few investors found reassuring. After sweeping layoffs throughout the previous year, Momentus announced last month that it still wasn’t enough.
Specifically, Momentus canceled upcoming flights and laid off further staff (up to one-fifth of stragglers in this round). The reason? Per the company’s SEC filing detailing the cancellation, Momentus has a material “inability to support continuing operations for the expected launch date as a result of the Company’s limited liquidity and cash balance.”
Likewise, Momentus’ SEC filing said that its ability to ”fund operations for the next few weeks and months will be dependent on its ability to raise equity capital or engage in a strategic transaction.” In other words, dilute shareholders in a last-ditch effort to remain relevant or angle for a wider buyout. But, neither seems too bullish from my perspective, putting Momentus firmly on the list of space stocks to sell in 2024.
Astra Space (ASTR)
Astra Space (NASDAQ:ASTR) has a larger market cap than both our other two space stocks to sell combined. Yet, that doesn’t mean the company has a viable future.
In fact, the company’s consistent inability to pay debt and limited fundraising opportunities may mean the stock disappears sooner rather than later. As part of an obvious trend, Astra executed a reverse split late last year. Now, it seems as though its best bet to move forward is to desperately seek private funding.
Of course, here’s where things could get interesting. In November, the company ballparked a private buyout purchase price of around $30 million. At the time, it represented a significant premium. But today is a discount of about 30% compared to its market cap.
Compared to our other two space stocks, Astra has a handful of operationally viable endeavors, including a record of successful flights, though recent attempts met with failure. While its current per-share price, representing 4x book value, is certainly too steep for a private buyer, keep a close eye on Astra. Though it’s definitely a space stock to sell now, an opportunity may arise for an equity arbitrage play when pricing falls further.
On the date of publication, Jeremy Flint held no positions in the securities mentioned. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.