Permanent Fund invests in Astra, which lost a rocket and faces a class-action lawsuit
One of the companies the Alaska Permanent Fund Corp. has invested unknown millions into is Astra Space, a new California enterprise in the rocket business.
McKinley Capital Management, which made the investment with Permanent Fund money, says “Astra is one of the most high-profile success stories in Alaska’s emergence as a strategic location for the new space industry.”
On Thursday afternoon, an Astra Space rocket launched from Cape Canaveral failed three minutes after liftoff, destroying four small research satellites.
Like the rocket, Astra’s stock tumbled.
It sold for a peak of $15.47 last July after going public and is now down to $3.32.
There was also this heads up, filed with the Securities and Exchange Commission: “Astra, along with its chief executive officer, Chris Kemp, and chief financial officer, Kelyn Brannon, are defendants in a lawsuit filed on February 9, 2022, in the United States District Court for the Eastern District of New York, alleging violations of certain securities laws. Astra believes the claims are without merit and Astra, Mr. Kemp and Ms. Brannon will vigorously defend against these claims.”
Astra has been a customer of the Alaska Aerospace Corporation at the Kodiak rocket range, providing $2.1 million for launch pad construction costs. Astra has an exclusive operating contract for Launch Pad B in Kodiak.
On Nov. 19, an Astra rocket launched from Kodiak made it into orbit.
The mission that failed Feb. 10 was the fifth attempt by the company. The first three did not reach orbit and the one from Kodiak did but not carry a satellite.
Bank of America cut its outlook on the stock from $7 to $4 and said: "We believe ASTR’s overall fast approach to market has exposed some glaring issues in development that management must address before a stable launch cadence can be achieved. We continue to emphasize that reaching space is not an easy endeavor. The process leading up to orbital launch is rigorous and long for a reason. We understand current market conditions for launch services have created a new ‘race for space.' However, we believe that proper procedure early on in development will help translate into successful launch cadence and less troubles down the road."
In December, KerrisdaleCapital said Astra was “a story stock that’s yet another example of the questionable businesses going public” with special purpose acquisition companies.
“It’s also one thing to be launching test rockers in the dark wilderness of Kodiak, Alaska, suffering repeated failures in relative obscurity,” said Kerrisdale Capital, a company that was short on the stock, meaning that it was betting it would go down.
“It’s an entirely different situation now that Astra is public and launching out of Cape Canaveral—a change a former SpaceX logistics expert likened to ‘going from JV to varsity.”
The lawsuit against Astra claims its financial projections are based on “absurd market assumptions” about launching 300 rockets in 2025, which is 10 times higher than SpaceX achieved in 2021.
Alaskans don’t know why McKinley Capital Management, which was given $100 million of public funds to invest, put an undisclosed amount into Astra Space.
The lack of disclosure and the lack of transparency create many questions. In time, perhaps Astra Space will be a “high-profile success story,” the term that McKinley Capital and the Permanent Fund used in this document released last week.
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