New entrants in the space industry are grappling with the harsh realities of business.
Space companies have faced significant challenges in recent years, leading them to downsize their workforce and explore other avenues to reduce expenses, according to Sarbaz.kz citing WSJ.
The US space industry encompasses a wide range of players, from satellite operators dealing in Earth imagery and internet connectivity to defense contractors and space divisions of multi-billion-dollar corporations. Typically dependent on subsidies, they actively compete for contracts with the United States National Aeronautics and Space Administration (NASA). The two largest contractors are Elon Musk's SpaceX and Jeff Bezos' Blue Origin.
Like many startups, several space companies have become overly caught up in the space investment frenzy that followed SpaceX's successful launches, allowing them to attract substantial funding. By merging with special purpose acquisition companies (SPACs), they managed to secure significant capital for their growth.
SPAC (Special Purpose Acquisition Company) refers to firms created specifically to merge with another private company seeking to go public. Essentially empty shells with no assets or operating history, SPACs conduct initial public offerings, raising funds from investors blindly. When investing in such shares, investors are essentially buying into potential, with prospects of return if the company's leadership successfully negotiates a merger with a promising entity.
Planet Labs, a company employing satellites for Earth imagery and selling photographs and analytics, announced on Tuesday that it would be reducing its workforce by 117 positions. The company also significantly lowered its revenue forecast, attributing this to fewer clients than anticipated. Company representatives stated that these layoffs were an effort to ensure profitability.
Another firm, Astra Space, indicated that it had laid off around 70 employees and reassigned those who remained. The company failed to complete two launches for NASA and saw its valuation drop to $26 million from $201 million the previous year. On Friday, Astra announced its efforts to raise more funds and secured nearly $11 million from an external investor.
Satellogic, another company involved in Earth image and data sales, is undergoing its second year of personnel reduction. While it cut 18% of its workforce last year, an additional 8% have been affected this year. The company once aimed to launch 111 satellites but managed to deploy only 39.
Virgin Orbit, a promising startup, has gone as far as declaring bankruptcy. The company attempted to launch satellites using a modified Boeing 747 as a carrier for its rocket, which detached from the aircraft and proceeded to orbit. Prior to its bankruptcy, the company had projected $331 million in revenue for this year.
Rocket Lab USA, which also completed a listing in 2021, capitalized on the demise of its former competitor by taking over the former headquarters and facility of Virgin Orbit in California. Conducting launches and offering satellite-type spacecraft sales, Rocket Lab generated $211 million in revenue last year, surpassing its initial forecast. The company's leader stated at a recent investor event that achieving a positive cash flow is heavily dependent on Neutron – a larger new rocket it is developing.