The price action in Sidus Space (NASDAQ: SIDU) has not been pretty, not until recently, that is. The company was in a sustained downtrend due to its lack of revenue and outlook for risk. However, efforts to get its primary business into gear are gaining traction and setting it up for significant revenue growth in 2024. Because its primary business is Space as a service, the margin is expected to be sky-high and provide a significant lever for cash flow.
What is Sidus Space? Sidus Space is a manufacturing company focused on the space industry. It is headquartered on the Space Coast of Florida, providing hardware solutions to primarily space-related businesses. Today, this company is amid a shift from merely providing hardware to providing space-related hardware as a service. Satellites. Its LizzieSat system is a multi-purpose satellite constellation intended to gather and distribute real-time data for Earth observation and the IoT. The company will also help you design, build and launch your satellite.
The first LizzieSat is scheduled for launch in March. It will be followed by several more this year, with accelerating launches in 2025. Because the satellite manufacturing process is a hybrid of traditional and 3-D printing technologies, the company is expected to scale easily as demand for its services grows.
NOAA validates Sidus Space
The rally in Sidus Space stock began before the NOAA announcement but was supercharged by it. What happened is the company received a license from NOAA, paving the way for its operational success. The Tier 1 Remote Sensing License allows Panchromatic and Short Wave imaging to be sold to governments, institutions and businesses. The approval includes the upcoming LizzieSat launch and subsequent launches, removing a major hurdle for the company.
The imaging stream will flow through the company’s FeatherBox Artificial Intelligence processor, central to the satellites' design. The system can be used for a wide range of tasks, including monitoring shipping traffic, tracking illegal fishing, methane emissions and the impact of climate change. SpaceX will handle launches; SaaS revenue and income may begin as early as the 2nd calendar quarter of 2024.
The sell-side is optimistic about Sidus Space
The sell-side is surprisingly optimistic about Sidus Space, given its cash burn and low expectations for 2023 revenue of less than $10 million. There is only one analyst rating the stock tracked by Marketbeat, but the sentiment is bullish, a speculative Buy, that has been affirmed by recent news.
On the institutional end of the spectrum, the institutions own more than 20% of the stock and have only bought it for the last two years. Ownership is broad and includes several funds. The top institutional owner is Vanguard Group at just over 1.3%, followed by Geode Capital Management, and both recently made significant increases in their holdings. Insiders own about 56% of the stock.
The technical action: Sidus Space prepares for launch
The price action in Sidus Space is favorable to reversal. The action hit a low recently and then began to spike on high volume. The volume is partly due to short-covering but marks a significant bottom for the market.
The action has since retreated to test and confirm support and is now facing the next hurdle, resistance at $12.00. A sustained rally may form if the market can get above this level. If not, this stock could be range-bound until more news and results confirm the outlook. Among the risks for Sidus Space are capitalization and dilution. The company has been burning through capital at an alarming rate and leaned into dilutive actions to amend the shortfall.
