Rat race (10/25/22)

Good morning. A final reminder to anyone in Vegas for Ascend—we’re hosting a happy hour tonight. Read on for the details.

In today's newsletter:🎙️ Pathfinder #0022 with Andy Lapsa🐻 The bear case for space, cont.🔁 People on the move

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Pathfinder #0022, featuring Andy Lapsa

Today’s episode takes us to the burbs of Seattle, where one startup aims to build an entirely new type of rocket.

Our guest, Andy Lapsa, is the CEO and cofounder of Stoke Space. The startup, whose north star is building 100% reusable rockets, raised a $9.1M seed round in 2020, graduated from Y Combinator's Winter 2021 batch, and then announced a $65M Series A in December.

All the while, Stoke has been moving quickly to build a completely new kind of rocket. Over the course of our 70-minute conversation, we talk at length with Andy about Stoke’s technological strategy and long-term prospects.

Today’s episode is brought to you by Spaced Ventures, which recently launched an effort to open an investment round into SpaceX. The space investment portal has received over $38M million in pledges from 2,150+ investors.

A sneak peek into Pathfinder #0022

• Andy and cofounder Tom Feldman spent ~18 years combined at Blue Origin

• The three T’s—thesis, team, and track record—that they searched for after leaving Blue

• Why Stoke believes it’s tackling an “engineering challenge, not a science problem”

• What Stoke’s doing differently, from thermal protection systems to starting with the second stage

• The interplay between speed, vertical integration, and tightly coupled systems

• Stoke’s prospects in a post-Starship world

And there’s a whole lot more, from sustainability to Stoke’s test stand out in Moses Lake, WA—but we’ll leave it to you to find those gems yourself.

Where to get Pathfinder #0022

🎥 Watch on YouTube🎧 Tune in on Spotify🍎 Listen on Apple

Wall Street vs. Space Tech

Last week, we took a look at Credit Suisse’s initiation of aerospace & defense (A&D) industry coverage. In complementary equity commentary published earlier this month and seen by Payload, analysts break down their generally bearish position on the aerospace sector.

As a refresher…

…here’s one quote from Credit Suisse we published on Friday: “The space industry is one that largely consists of capital-intensive companies operating in a competitive arena with challenged unit economics, high technical and operational risks, unsupportive base rates, and a resistance toward consolidation.”

Moreover, the analysts highlight a few key risks endemic to the space industry:

• Tendency toward speculative bubbles driven by consistently overestimating potential revenue and underestimating costs

• Best opportunities locked up by the primes and SpaceX

• Unique exposure to tightening macro headwinds

• High cash burn rates and shortening runways

• Heavy exposure to valuation reflexivity (“lower public/private valuations → lower capex/opex budgets → less revenue”)

Examining each rating

• Outperforms = Avoid the risks outlined above and offer a differentiated product with long-term value proposition (e.g., government focused earth observation and niche hardware suppliers)

• Neutrals = Equity dilution and unfavorable acquisitions

• Underperforms = Less supportive valuations, tighter margins, higher technical/operational risk, and higher exposure to reflexivity

The launch risk

Credit Suisse believes that launch companies rely too much on LEO megaconstellation deployments to close the business case. Analysts are also skeptical of the LEO broadband opportunity due to continued fiber and fixed wireless access deployments, data consumption trends, and the underlying economics of fixed capacity networks.

Credit Suisse initiated coverage on five pure-play space names: $MYNA, $BKSY, $SPIR, $RKLB, and $VORB.

Check out our story online for a breakdown of how the bank assesses each company's prospects.

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Join Us At Our Ascend Happy Hour Today

Payload and AIAA are hosting a happy hour for marketing and communication professionals in the space industry.

When? Tue, October 25, 2022, 5:00 PM – 6:30 PM PDTWhere? Yard House at The LINQ, 3545 South Las Vegas Boulevard Las Vegas, NV 89109

In Other News

• The ISS had to fire its thrusters for more than five minutes Monday night to dodge debris from Russia’s ASAT test in late 2021.

• Separately, Russia’s Progress spacecraft departed the station on Sunday night to make way for another freighter ship that’s set to arrive this week.

• Relativity unveiled the fourth generation of its Stargate metal 3D printer.

• Northrop’s ($NOC) next cargo resupply mission to the ISS will include a next-gen 3D-bioprinter that aims to print human tissues in space.

• Iridium ($IRDM) raised 2022 guidance for the second time this year and teased plans for direct-to-cell connectivity.

• OneWeb has made contact with all 36 satellites launched by ISRO over the weekend. Keep scrolling for a picture of the launch.

The View from India