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Get to Know Sidus Space Stock, This Week’s Winner
Stock Analysis & Ideas

Get to Know Sidus Space Stock, This Week’s Winner

In a rough week for stock traders, a week when the S&P 500 sold off by 5.25%, and the Nasdaq plunged 4.3%, one stock stood head and shoulders above (almost) all the rest. Despite giving back 24% gains on Friday, tiny Sidus Space (SIDU) turned out to be the best-performing stock on the stock market this week, skyrocketing 287%, as of this writing.

It prompted investors to shout in unison: “Um… who or what is Sidus Space?”

Which is actually an excellent question. Who is Sidus Space?

As a publicly-traded stock, Sidus Space is a company barely six months old. In December 2021, a year that was made famous (or infamous) for its series of space companies that went public via “special purpose acquisition vehicles” — SPACs — Sidus Space quietly shuffled onto the Nasdaq. And it did so via the almost quaint method of holding a traditional IPO of three million shares of stock, asking the modest price of just $5 apiece for the shares — just half the usual asking price for a SPAC IPO.

In its IPO announcement, Sidus described itself as a “space-as-a-service” satellite company focused on “satellite design, manufacture, launch, and data collection.” Within days of IPO’ing, Sidus announced that NASA had hired it to help Astra Space work on autonomous guidance software for spacecraft. Sidus then went on to sign contracts with Kongsberg Satellite in Norway, Aitech Systems in Israel, and Dhruva Space in India. 

In April, Sidus filed its first financial report as a public company, boasting of 95% year over year revenue growth. Just one month later the results came out for Q1 2022 — 1,075% revenue growth to $1.8 million, and with a 54% gross profit margin.

Granted, Sidus wasn’t yet profitable. Operating expenses grew roughly 740%, eating up all the gross profit and leaving Sidus with a $2.3 million net loss ($0.14 per share). But at least you can’t fault the company for not growing fast enough!

What’s next for Sidus Space?

Looking ahead, Sidus eschewed traditional guidance on revenues and earnings (i.e. losses) to emphasize instead how it is “launching numerous satellites over the next 12-24 months.” Furthermore, CEO Carol Craig said that Sidus’s backlog of additional work to perform is continuing to grow.

It didn’t take long for her to back up those words with numbers.

In a press release Wednesday, Sidus announced that it has joined Collins Aerospace’s team working on NASA’s “Exploration Extravehicular Activity” (xEVAS) services contract. Now… that’s kind of a mouthful, and the acronym doesn’t exactly roll off the tongue either, does it? 

To translate this into English, therefore, what Sidus is doing is helping Collins Aerospace — which is a subsidiary of Raytheon Technologies (RTX) — to fulfill the 10-year, $3.5 billion xEVAS contract that NASA awarded to Collins, and to its rival Axiom Space, earlier this month. And as for what that contract involves, xEVAS itself refers quite simply to new spacesuits that Collins (and Axiom, and now Sidus, too) will be developing for NASA.

These spacesuits will be what astronauts wear outside of a spacecraft or space station (that’s the “extravehicular” part) when working on the well-publicized, multi-year Project Artemis program to return astronauts to the moon in 2025 (or thereabouts), as well as when working aboard the International Space Station and the planned Lunar Gateway.

How important is this to Sidus?

In short, this contract is a pretty big deal — but investors shouldn’t get too carried away (as they arguably did with Sidus stock this week). The details here are important. For one thing, this $3.5 billion contract, when spread over 10 years, is actually worth only about $350 million per year. For another, only a small fraction of that $350 million will be going to Sidus. Presumably, the $3.5 billion will first be split between Collins and Axiom, as the principal contractors. Then, these two contractors will take the lion’s share of the money for themselves, and only then parcel out smaller sums to their “team” members — in Collins’ case, including team member Sidus.

Precisely how much of the initial $3.5 billion will eventually trickle down to Sidus remains to be seen, of course, but it’s not likely to be a lot of money. Then again, when you consider that over the last 12 months, Sidus collected all of just $3.1 million in revenue, it won’t take very much extra money from the xEVAS contract to “move the needle” for Sidus.

It’s that prospect, one imagines, that got investors so very excited about Sidus this week.

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Disclaimer: The information contained in this article represents the views and opinion of the writer only, and not the views or opinion of TipRanks or its affiliates, and should be considered for informational purposes only. At the time of publication the writer did not have a position in any of the securities mentioned in this article.

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