What happened

Space stock New Providence Acquisition (NPA) blasted off on Tuesday, closing the day up 20.9% after noted ­short seller Citron Research issued a "long" recommendation on this special purpose acquisition company (SPAC).  

So what

To refresh your memory, New Providence is the SPAC that announced, back in January, plans to reverse-merge into itself space cellular communications company AST SpaceMobile. In so doing, it would (1) effectively execute an IPO of SpaceMobile and (2) give SpaceMobile about $462 million to use, building and launching a satellite constellation that would permit ordinary cellphones to talk with each other via space.

SpaceMobile says its satellite network is going to be "game-changing ... for global mobile connectivity" and will give it access to a "$1 trillion global mobile wireless services market" with 5 billion potential customers for its services.

Cartoon rocket zooming up like a stock on a chart

Image source: Getty Images.

Now what

And now Citron Research has apparently bought into that idea, hook, line, and sinker. As the analyst explained on Twitter today, "all SPACS are speculative," reasoning that if that's the case, then "why not go with one with a $1 trillion TAM that has the potential to change the world with real partnerships"?

Calling SpaceMobile "the most important Space story in the market," Citron then proceeded to apply the same multiples to projected earnings that other space stocks currently enjoy, to create a scenario in which New Providence stock should be selling for $53, $125, or even $373 a share -- before ultimately deciding to slap a price target of $50 on NPA itself.

Is it reasonable for Citron to try setting a price target, today, on a company that won't have revenues or profits -- or satellites -- for years? Maybe not. Then again, like the man said: "All SPACs are speculative."