Today witnessed a substantial surge of 15% in BlackSky Technology's stock price.
Unleashing BlackSky's Potential: A 42% Surge and More
BlackSky Technology (BKSY, 5.89%) has witnessed a remarkable 42% surge over the past 52 weeks, and it seems this trend isn't slowing down anytime soon. The company made headlines again on Tuesday, announcing a "six-figure" contract to provide subscription-based Gen-2 imagery and analytics services to an international client. By the end of the trading day, the stock had soared by 15%.
The Grand Announcement
A "six-figure" contract may not sound like much at first glance, but in the world of space technology, it's a considerable win. While the details of the contract value are under wraps, a six-figure contract typically falls between $100,000 and $1,000,000 annually[1]. However, BlackSky didn't specify whether the six figures are an annual figure or a payout spread over a longer period.
Despite these uncertainties, the stock's impressive reaction to the news suggests investors are optimistic about the company's prospects. The new customer is a strategic partner, and the revenue generated from the contract will be additive, further boosting BlackSky's earnings[1].
Is BlackSky Stock Worth Investing In?
Space technology stocks are known for their astronomical valuations, and BlackSky is no exception. The company is currently trading at more than five times its annual sales, which according to my metrics, is on the pricey side[1]. Additionally, BlackSky's earnings are in the red, with trailing-12-month losses amounting to $41 million, and the company is burning through cash at a rate of nearly $55 million per year[1].
Despite these challenges, BlackSky has a comfortable cash cushion of $106 million, ensuring it has at least a couple of years before dipping into the red[1]. The company is also expected to turn profitable by 2028, offering a potential long-term investment opportunity[1].
However, considering BlackSky's current valuation and the risks associated with the space industry, investing in the company remains a speculative move. New investors may want to consider a cautious approach, pending further financial performance and market developments.
The six-figure contract BlackSky secured is a notable indication of the company's growing popularity in the space technology industry. With the new revenue stream, BlackSky's financial metrics could improve significantly by 2028, potentially making it an appealing investment option for some.
In the context of finance and investing, BlackSky stock's surge over the past year and the latest contract announcement have attracted the attention of investors, who are probably keeping a close eye on the company's future performance.
While BlackSky's current valuation is high, considered against its annual sales, the company's healthy cash reserve and expected profitability by 2028 could make it an attractive target for investors looking to invest in growing industries, such as space technology.
Despite the potential for long-term gains, putting money into BlackSky stock should be approached with a degree of caution due to the inherent risks affiliated with the space sector and the stock's high valuation relative to its earnings.
