The space economy is heating up, and investors have another way to play the growing industry.
On Thursday, space infrastructure company Redwire announced plans to become a publicly traded company by merging with special purpose acquisition company Genesis Park Acquisition (ticker: GNPK).
Genesis Park stock rose almost 4% in premarket trading.S&P 500andDow Jones Industrial Averagefutures, for comparison, are both down slightly.
Redwire’s SPAC merger follows similarannouncements fromAstra, Rocket Lab USA, BlackSky, AST & Science, and Spire Global.
Redwire, however, is a little different from those firms. The space infrastructure company doesn’t launch things into space like Rocket Lab and Astra, or operate a constellation of hundreds of satellites beaming information down to earth like BlackSky, Spire, and AST. Instead, Redwire makes communication antennas and navigation controls for satellites, launch adapters to ready satellites for their trip into orbit, as well as many other products, including solar arrays.
Another thing that makes Redwire different is that it has more sales right now. The company generated about$119 million in salesin 2020, and 2021 sales are projected to be $163 million. What’s more, the company generated positive free cash flow and net income this past year.
By 2025, the company projects $1.4 billion in sales and almost $200 million in free cash flow.
The SPAC merger deal will bring $170 million into company coffers and values Redwire stock at $680 million, based on the 68 million shares outstanding when the Genesis Park merger wraps up. In comparison, Rocket Lab and Astra have market capitalizations of about $5.1 billion and $3.1 billion, respectively. AST, Spire, and BlackSky market capitalizations are roughly $2.2 billion, $1.6 billion and $1.5 billion, respectively.
The lower value might make Redwire an option for value-oriented investors, who prefer cash flow today over cash flow projected far in the future.
Barron’srecentlywrote positivelyabout the growing space economy. We picked one value-oriented stock,Lockheed Martin(LMT), along with a high-growth, more speculative name, Rocket Lab. Space is going to grow in importance for investors and having some space exposure is a good idea.
Vector Acquisition(VACQ) is the SPAC merging with Rocket Lab. Its shares are down about 2% this week. Lockheed shares are up slightly. The S&P, for comparison, has dropped 0.6%.