Shares of Holicity (HOL) took off like a rocket on Tuesday after it announced its plans to merge with private space company Astra. The stock had jumped by almost 50% before settling back to a gain of about 41% as of 11:24 a.m. EST.
Shares soared after the blank check company said it will merge with the rocket maker. Astra offers space launch and satellite delivery services, and was the fastest private company in history to achieve orbital launch capabilities, the company said in a statement.
The deal will result in the company having an enterprise value of about $2.1 billion. Astra has already signed deals for 50 launches, and booked more than $150 million in contracted launch revenue. It will start delivering customer payloads in the summer of 2021, and plans monthly launches by the end of the year.
"This transaction takes us a step closer to our mission of improving life on Earth from space by fully funding our plan to provide daily access to low Earth orbit from anywhere on the planet," said Astra founder, chairman, and CEO Chris Kemp.
The transaction for initial Holicity shareholders values the newly combined company at about 3 times estimated 2025 adjusted EBITDA. Investors jumping in today should realize that this valuation was based on a $10 share price for Holicity, and adjust their valuations accordingly at current prices.