Satellites are delicate things.
Built with sensitive circuitry, powered by crack-able solar panels, and swathed in paper-thin sheets of gold foil, satellites built on Earth must somehow survive launch stresses of multiple Gs without shaking apart as the rockets that carry them blast into orbit. But what if it were possible to avoid the stress of a rocket launch, and build satellites in space?
The first space company to figure that out will lead an emerging field of space-based industry, where satellites, spacecraft, and even entire space stations are constructed on-site in orbit, with no need to withstand Earth's gravitational forces -- much less the multi-G super-stress of a rocket launch.
Image source: Redwire.
Will Redwire be No. 1?
For nearly a decade, NASA has partnered with 3-D printer-maker "Made in Space" to develop "On-orbit Servicing, Assembly, and Manufacturing" (OSAM) for satellites. In 2019, NASA awarded the company a $73.7 million contract, dubbed OSAM-2, to demonstrate the construction of a 16-meter-long solar array in orbit. (Northrop Grumman (NOC 0.50%) will run the mission, and SpaceX will launch the OSAM-2 machine that will do the work.) One year later, Redwire Corporation (RDW +20.38%) acquired Made in Space, and inherited its NASA contract.
This mission, also known as "Archinaut One," is scheduled to launch in 2024. As illustrated in a pair of presentations that NASA released last month, Archinaut comprises a single "refrigerator-sized" spacecraft. In orbit, Archinaut will use its attached 3-D printing unit to print a 10-meter "beam" that will, as it's extruded from the printer, drag out and deploy a faux solar array that was preloaded aboard the spacecraft.
An onboard robotic arm will then reorient the printer to build a second, six meter beam that will extend in the opposite direction. At this point the demonstration will be complete. What began as a roughly cube-shaped, refrigerator-sized box will have rebuilt itself into a winged satellite stretching more than 50 feet in length.
Mass versus space
Why is this important to the space industry? Well, consider:
Archinaut One will mass only about 250 kg -- well within the payload capacity of the Falcon 9 rocket that launches it. But mass isn't the problem. If you need to put a 16-meter-long satellite in orbit, your real problem is space -- as in finding a rocket fairing (i.e. nosecone) with enough space inside to contain the satellite. Certain Atlas V fairings from United Launch Alliance are big enough -- but the 13.1 meter fairing on a SpaceX Falcon 9, for example, is not big enough, no matter how little the satellite weighs.
But what if you can send 250 kilograms of tightly compacted satellite-cum-3D-printer-cum-filament into orbit? What if you then instruct that 3D printer to build a much bulkier satellite from the filament it brought along? All of a sudden, bulk doesn't matter anymore -- and your only issue is lifting as much mass as you need into orbit, to build however big a satellite you want once you get there.
(And consider, too: If 250 kg of Archinaut can build a 16 meter-long spacecraft, what could Falcon 9 build if it maxed out its 22.8 ton capacity to orbit? What could Falcon Heavy do with 63.8 tons of 3D-satellite-factory in orbit?)
According to NASA, Archinaut will set the stage for orbital construction of "large space telescopes ready for orbital deployment, or delivering state-of-the-art communications antennae, radar booms or other extra-large hardware" that wouldn't ordinarily fit within a rocket fairing. It would "eliminate hardware or satellite size limits imposed by the available cargo space and mass-lifting capacity of modern rockets."
Is Redwire worth it?
So you can see why NASA is excited about Archinaut. But is Redwire stock the right way for investors to invest in this bright future?
I think yes.
NYSE: RDW
Key Data Points
You see, Redwire may not be a profitable company -- yet. Its revenue last year was a mere $138 million, and Redwire stock lost $1.36 per share. That being said, analysts polled by S&P Global Market Intelligence have high hopes for the company. By 2024 -- the year OSAM-2 launches -- Wall Street forecasts that Redwire will earn its first profit of $0.60 per share. If they're right about that, then right now Redwire stock sells for barely five times its earnings two years out. And earnings are expected to double in 2025 (so the stock is selling for a 2.3x earnings multiple based on 2025 estimated earnings).
With Redwire stock trading for barely $3 a share today, investors don't seem confident in those estimates. But if Redwire beats the odds and proves it can do what NASA has hired it to do, this stock could be one of the early winners in the space race -- and bargain-priced to boot.
