What happened
The stock of special purpose acquisition company Stable Road Acquisition (SRAC +0.00%) woke up on the wrong side of the bed today, down 19.9% at one point this morning in response to a most disappointing announcement.
Momentus, the privately held space transportation company that Stable Road intends to bring public in an IPO later this quarter, needs further Federal Aviation Administration approval for the Vigoride space tug that it had planned to launch aboard a SpaceX Falcon 9 rocket later this month.
Image source: Getty Images.
So what
As Momentus explained, although the company has all other necessary licenses for its space tug to launch, it needs more time to secure FAA approval of Momentus' payloads, including completion of a standard interagency review. And it doesn't expect to receive this approval in time for a January launch. Accordingly, the company is postponing its launch until later in 2021.
The company noted that the delay of the January launch will not affect its other launches scheduled with SpaceX for June and December of this year. Nor should postponing the January launch affect revenue for the year as a whole, as long as the launch still takes place sometime this year. Nor will it delay the company's planned IPO, still on track to take place later this quarter.
Investors, presumably responding to these reassurances, cut short their selling of Stable Road stock today, and its losses had been reduced to about 7.8% as of 1:10 p.m. EST.
Now what
But in the big picture, reassuring investors that 2021 revenue will not be affected by the delay doesn't mean a whole lot. Management is only promising $20 million in revenue this year, and even that sum includes nonbinding options, although deposits have been paid. At a current market capitalization of $352 million, Stable Road would still be selling for more than 17 times current-year revenue even assuming the company maxes out its revenue plans in full.
Simply put, investors in Stable Road aren't in this for the current-year valuation, but are rather hoping that Momentus, once public, will deliver on its longer-term goals. These include hitting $152 million in revenue next year, nearly $600 million in revenue in 2023, and $1.2 billion in 2024.
It remains to be seen if the company can hit any of those targets, and starting off with a launch delay in 2021 probably isn't the best way to boost investor confidence.
