Momentus
If you are following the commercial space industry, you may have seen articles popping up about the merger of Momentus and Stable Road Acquisition Corp. When the acquisition goes through, Momentus will become a public traded company. That is a milestone in the space industry because there are so few dedicated space companies that trade publically. I have talked about it in my other articles. Most of the money that goes to these companies are private equity firms or government contracts.
I will answer in this article what does Momentus do? Why are they being acquired? Why should you care?
What is Momentus?
Momentus was founded in 2017 by Mikhail Kokorich. Momentus saw that rideshare missions were becoming more and more popular and wanted to get into that market. Rideshare missions are when companies fill in the extra room on a larger rocket like a Falcon 9, opposed to a dedicated launch like on an Electron from Rocket Lab.
To better serve that niche, they developed the Vigoride.
Vigoride
Traditionally the argument between small launchers and large launchers is that. Small launchers get your satellite to the exact spot you want it, but it is more expensive. With a large launcher, you get your satellite to a general area, but it is cheaper to get it there.
That is where the Vigoride comes in. The Vigoride is like a smaller ship on the main launcher. Once a company signs up with Momentus, they attach the satellite to the Vigoride, and that Vigoride goes into the large launcher.
Once the main launcher releases the satellites into space, the Vigoride takes the satellite to the company’s desired coordinates. Rocket Lab has something similar with their Photon.
Quick thoughts
I think that Vigoride is a better business model than making a small launch company. The amount of capital to create and operate a small launch company is in the $100s of millions.
Suppose we compare a small launcher company to a rideshare company. The rideshare company only needs a few million to get started and if their profit is not as pricy to make and easier to test.
The market is pretty set with the number of heavy launchers there are, and those launchers are regularly flying. I think it is a better business move to use those heavy launchers to one’s advantage rather than trying to go for a small launch company. Especially because there is no real indicator that there is a market for small launch.
Funding
I am not the only one who thinks that this is a good business model. Only a year after their founding, they were able to raise $8.3 million in seed funding.
Then in 2019, just a year after that, they raised an additional $25.5 million in series A funding. Bring the total to around $34 million.
That amount of money should be plenty to sustain them for the next few years and to let them develop more technology, which they have already started to do.
Vigoride Extended Line service
The Vigoride is designed to move satellites from Low Earth Orbit to other parts of Low Earth Orbit. I assume the Vigoride will be their bread and butter and what will make them the most money.
Due to all the funding they received, they have been able to work on the Vigoride Extended Line service. The extended line service can take a satellite from LEO and put it in Geostationary Orbit. (Which is the farthest orbit a satellite can fly in)
I really like that they are adding that service. For the most part, companies are moving away from big satellites in GEO and focusing on small satellites in LEO. That means fewer flights are going to GEO, and that leaves some companies having to pay a lot of money to get their satellites there.
With the extended line service, these companies will be able to get their satellites to GEO for a significant discount. Will this be Momentus’s moneymaker? Probably not, but it is a good option to have for a niche market.
The Merging
As I mentioned at the start of this article, Momentus is merging with Stable Road Acquisition Corp. The agreement between the two “will result in the Company (Momentus) becoming publicly listed. Upon the closing of the transaction, the combined operating company will be named Momentus Inc. and its securities will be listed on Nasdaq and trade under the ticker symbol “MNTS.”
Below is a more detailed explanation of how the transaction of the merger will work.
“Stable Road, which currently holds approximately $172.5 million of cash in trust, will combine with Momentus, which is estimated to result in a pro forma enterprise value of approximately $1.2 billion. Momentus’ existing equity security holders will hold approximately 75% of the issued and outstanding shares of Class A common stock immediately following the consummation of the merger, assuming no redemptions by Stable Road’s existing public stockholders.”
“Cash proceeds in connection with the transaction will be funded through a combination of Stable Road’s cash in trust and through a $175.0 million fully committed common stock PIPE at $10.00 per share, including investments from private equity growth investors, family offices and select top tier public institutional investors.”
Should you Invest?
The question that may have brought you to this article is, should I invest in Momentus or Staple Road Acquisition Corp? Personally, I think it is a good idea because the price is so low right now. It is always hard to judge businesses in the space industry because the industry is so volatile, but I think that Momentus is going to be a safer bet.
The research I have done shows that Momentus has at least 25 agreements lined up with customers to fly payloads. They have also stated that they have a billion dollars worth of contracts lined up, but that doesn’t always mean much.
Lastly, I will say that I think their business model is sustainable and expandable. The industry is planning on having more launches per year and more satellite companies popping up. That means there will be business for Momentus. The things that Momentus has to worry about are competitors and staying competitive.