"Sierra Space Corporation."
It's been a couple of years since I last had an opportunity to write about this space stock. Back in 2023, the privately held company raised $290 million in new funds to complete development of its Dream Chaser spacecraft -- and surged ahead to a $5 billion private market valuation, making Sierra Space 5X a unicorn stock.
And at long last, Sierra Space is back in the news this week. But not in a good way.
Image source: Sierra Space.
Playing ketchup in space
Remember the old Heinz ketchup commercial, the one singing "an-ti-ci-pation, an-tic-i-pay-yay-shun," as the kid waited for his ketchup to pour out of the bottle.
For space investors, that's what it's felt like waiting for Sierra Space to do something interesting these last several years. It's been nearly a decade since NASA awarded Sierra Space (technically, its parent company Sierra Nevada Corp.) a role in its $14 billion CRS-2 project to send Commercial Re-Supply spacecraft to the International Space Station (ISS).
Valued at roughly $628 million per launch, and with Sierra expected to run seven of the launches, the contract felt like a windfall for Sierra Space, which was a surprise winner added to the list of two incumbent CRS-1 providers, SpaceX and Northrop Grumman (known as Orbital ATK at the time).
Through 2024, the three companies were hired to launch a total of 18 CRS missions to keep the ISS astronauts well-stocked with supplies. SpaceX would use its Dragon spacecraft for its launches, and Northrop its Cygnus supply vessel. Sierra, the new entrant to the CRS club, was chosen on the strength of the new Dream Chaser spaceplane it was designing, which was expected to start launching in 2019.
Problem is, it's 2025 today -- and Dream Chaser hasn't flown even once.
Sierra was making NASA wait
And NASA's patience with Sierra Space has finally worn thin. We had warnings that things were not looking great for Sierra back in 2022, when NASA extended its existing CRS-2 contract from the original 18 launches to 32, running through 2026. In that extension, NASA specifically named SpaceX to conduct 15 of the launches, Northrop 14, and Sierra... only three.
Last week, the space agency announced it has decided to "modify" the contract even further. And by "modify" I mean it's probably going to kick Sierra out of the contract entirely.
Admittedly, NASA put it kindlier than that: "After a thorough evaluation, NASA and Sierra Space have mutually agreed to modify the contract, as the company determined Dream Chaser development is best served by a free flight demonstration, targeted in late 2026."
That's how NASA phrased its ultimatum -- but the meaning is clear.
After 10 years of no Dream Chaser flights, NASA's tired of waiting for Sierra's phantom spacecraft. Now, NASA's telling the company it needs to either prove Dream Chaser can fly, after which NASA might permit it to fly to ISS and pay for the flights -- or else admit Dream Chaser is a mirage and let SpaceX and Northrop handle the work of resupplying the space station. In the meantime, NASA's shutting off the funding spigot to Sierra, promising to provide only "minimal support through the remainder of the development and the flight demonstration."
Furthermore, even if Sierra does get Dream Chaser to orbit by next year, "NASA is no longer obligated [to buy] a specific number of resupply missions," and only "may order Dream Chaser resupply flights to the space station" (emphasis added -- "may," not "will").
Time is running out for Sierra Space -- and for a Sierra Space IPO
You can understand NASA's frustration. ISS is due to deorbit in 2030. (NASA's even paying Elon Musk $850 million to make it so). If Sierra doesn't get Dream Chaser operational soon, there's not going to be an ISS to deliver supplies to anymore. And in any case, SpaceX and Northrop appear to have the situation well in hand, such that there's not really any need for Sierra Space's Dream Chaser spacecraft to lend a hand.
Granted, there's still the possibility Dream Chaser could be used for flights to one or more future private space stations that will eventually replace ISS. That's probably part of the reason (some) investors still hope we will see Sierra Space announce an IPO one day.
If NASA is starting to give up on Sierra Space's future, though, maybe investors should, too.
