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Why Stable Road Acquisition Stock Fell 19.9% in March

By Keith Noonan - Apr 6, 2021 at 8:18AM

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The SPAC stock has seen some big swings, but it's still up roughly 32% over the last year.

What happened

Shares of Stable Road Acquisition (SRAC) dipped 19.9% in March, according to data from S&P Global Market Intelligence. The space-focused special purpose acquisition company's (SPAC) valuation fell amid a broader pullback for growth-dependent tech stocks. 

SRAC Chart

SRAC data by YCharts

Stable Road Acquisition announced in October that it would be taking space and satellite services company Momentus public through a merger, and enthusiasm for the emerging industry's potential helped push the SPAC's share price to a record $29.18 per share in February. Following subsequent sell-offs for speculative growth stocks, the stock now trades off 57% from its lifetime high despite also being up 32% over the last year.  

A satellite above the Earth.

Image source: Getty Images.

So what

Momentus is still a very young business. As of Sept. 30, the company reported having customer contracts that would generate about $90 million in sales over the next several years. However, the company notes that the global space economy is set to grow from $415 billion in 2020 to $1.4 trillion in 2030, and it sees opportunities to provide in-space transportation, satellite-as-a-service, and in-orbit services. With valuations for growth-dependent tech stocks pulling back last month, it's not surprising that Stable Road Acquisition's share price lost some ground. 

Now what

Stable Road stock has slipped lower early in April's trading. The company's share price is down about 2% in the month so far. 

SRAC Chart

SRAC data by YCharts

Stable Road is set to merge with Momentus in a deal valuing the combined company at $1.2 billion. The deal is expected to close in the near future, and the combined company will begin operating under the Momentus name and trading on the Nasdaq Stock Market under the ticker symbol MNTS. 

Momentus is an early mover in a market that has big growth potential, but investors should keep in mind that the company's outlook remains very speculative at this point. Excitement surrounding space stocks could help Momentus soar following its upcoming public listing, but the company is already on track to hit the market with a highly growth dependent valuation, and there's not a lot of visibility on how the business will perform.  

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