What happened
The U.S. National Reconnaissance Office -- the NRO, America's spy satellite factory -- has awarded "billions of dollars" of contracts to commercial spy satellite operators Planet Labs (PL -4.12%), BlackSky Technology (BKSY -1.95%), and Maxar Technologies (MAXR).
News of the contract sent all three of these space stocks skyrocketing earlier this week. Indeed, one of the three, BlackSky, nearly doubled its stock price on Wednesday, and all three of them have gone nowhere but up since the news was announced -- including today. What's curious, though, is that a fourth space stock, Virgin Galactic Holdings (SPCE -7.10%), has been moving higher in tandem, even though Virgin Galactic has absolutely nothing to do with spy satellites.
As of 3 p.m. ET, as Planet gains 11%, and BlackSky gains 6.6%, Virgin shares are up another 5.5% as well -- even surpassing Maxar's gain of 3.4%.
Image source: Getty Images.
So what
It's worth pointing out that there's been no new positive news concerning any of these four space stocks since the NRO announced the contract awards on Wednesday. Rather, the gains appear to be partly from momentum -- people buying because the stocks are going up, which has the effect of making them keep going up -- and partly from investors digesting the news and deciding that it does, in fact, make these stocks more valuable.
That makes more sense for the companies that actually won awards, though -- Planet, BlackSky, and Maxar -- and a bit less sense for Virgin Galactic. In the case of Virgin, I think it has more to do with momentum trading and a bit less to do with the number-crunching.
Now what
What do the numbers tell us about how much more valuable Planet, BlackSky, and Maxar have become, thanks to these NRO contract wins?
Begin with Maxar, which says NRO's awards promise it as much as $3.2 billion in new revenue spread over 10 years of contracts. That works out to an extra $320 million per year for a company that already does $1.8 billion in revenue per year -- an 18% boost in revenue that now seems more than baked into Maxar's stock price, which has risen 26% since the contracts were announced.
BlackSky in contrast says it expects only to get $1 billion in new revenue, also spread over 10 years, from NRO -- $100 million more per year. BlackSky is so much smaller than Maxar, however, that this works out to a nearly 250% increase in annual revenue. But BlackSky stock is up "only" 121% since the news was announced. Seems to me, this suggests BlackSky stock may have more room to run.
And Planet Labs? So far we haven't heard anything from Planet management about how much its NRO award might add to its current $131 million in annual revenue. All we know is that Planet's stock is up 32% since the news was released. If it turns out, though, that Planet's contract is worth at least $40 million a year going forward -- $400 million in total, that is to say, or less than half what BlackSky won -- then I'd say there's a good chance that Planet Labs stock has not yet been bid up enough.
Long story short, out of the four stocks named above, I see potential for profit in BlackSky -- and even more potential growth ahead for Planet Labs.
