Terran Orbital Stock Soars 71% On Rivada Deal

Key Takeaways

• Terran Orbital’s subsidiary, Tyvak Nano-Satellite Solutions, was awarded a $2.4 billion contract with Rivada Space Networks — potentially one of the biggest deals in smallsat history
• Terran will design and manufacture a total of 300 satellites for Rivada: 288 to be deployed and 12 to serve as spares
• After the announcement, Terran’s stock price (NYSE: LLAP) soared over 100%, closing at a 71.35% gain on Wednesday

Tech, and especially space tech, is one of the most exciting markets for investors, with huge potential for growth. But that volatility also makes the market risky. Investors are jumping at this latest Terran Orbital news, but is the satellite builder worth the hype? We’ll take a look at the company and where its stock may be headed.

If you need some help with the details of investing in cutting edge tech, Q.ai’s Emerging Tech Kit is able to help balance risk and reward through AI-powered diversification.

On Wednesday, small satellite manufacturer Terran Orbital announced that its subsidiary, Tyvak Nano-Satellite Systems, Inc., has secured a $2.4 billion contract to design, build, and deploy 288 low-earth orbit satellites for Rivada Space Networks. Terran will also build 12 additional satellites that will serve as “spares”, rounding out the contract at a total of 300 satellites.

Following the announcement, the spacecraft company’s stock took a trip to the moon, jumping over 100% at times before reentering the atmosphere to close at a 71% gain.

What Is Terran Orbital?

Terran Orbital is a space company that specializes in the design, production, and deployment of satellites. It also works in mission operations and provides in-orbit support.

The company was founded in 2013 by American financier Marc Bell. It’s based in Irvine, California, where it has 120,000 square feet of manufacturing space.

Tyvak, the Terran subsidiary that was awarded the $2.4 billion deal, was founded in 2011 and was acquired by Terran in 2013. Tyvak’s cofounder, Dr. Puig-Suari, developed the CubeSat specifications with Bob Twiggs in 1999, which have remained a standard in the space industry to this day.

What is Rivada Space Networks?

Rivada Space Networks is a European space company headquartered in Munich, Germany. The company was founded in 2022 by Irish entrepreneur Declan Ganley, who is currently the CEO of Rivada Networks, the terrestrial-focused branch of the company.

Rivada Space Networks specializes in using wireless spectrum and low-earth orbit (LEO) satellite constellations to provide high-speed, low-latency connectivity to government, enterprise, and maritime clients. Its services are similar to Elon Musk’s Starlink, but aimed at a different clientele.

What’s happening with Terran Orbitals stock?

Terran Orbital (NYSE: LLAP) is making massive moves after securing a major deal with Rivada Space Networks. Rivada is planning to pay Terran $2.4 billion to produce satellites for a LEO constellation that promises a high-speed, global network with speeds that rival terrestrial fiber. The satellites are expected to go into orbit in 2024, at the earliest.

Terran CEO Marc Bell told CNBC, “I believe this is the largest small [satellite] deal in the history of small sats – I don’t know any deal that is larger.”

Naturally, investors reacted with excitement. Terran Orbital’s stock closed at $2.93 on Wednesday — a 71.35% ($1.22) gain.

It’s hard to realize just how much of a game changer this is for Terran Orbital without some context. In Q3 2022, Terran’s revenue was just $27.8 million. Clearly, a $2.4 billion deal is a paradigm shift for the spacecraft producer.

The news comes at a time when Terran’s stock has been in decline. Terran Orbital debuted on the NYSE in March 2022, closing its first day of trading at $11.80 a share. Despite its gains on Wednesday, it is still down 70% all time.

The bullish case for Terran Orbital

Given the magnitude of the new deal with Rivada, it’s reasonable to suspect that Terran is beginning on a new trajectory. It’s common knowledge that stocks are often overvalued when they IPO due to hype. Terran Orbital has come down significantly in price since then, so it’s possible that it’s reached a more reasonable valuation — or, as Marc Bell believes, it may even be undervalued.

Terran does have a lot going for it: when Rivada put out its RFP (request for proposal), it likely fielded proposals from many qualified spacecraft builders, but decided to go with Terran over the competition. This speaks to Terran’s quality — after all, Tyvak’s cofounder did come up with the CubeSat specifications that have remained a standard for over 20 years.

Terran’s current pricing combined with its new contract and its seeming leg up on the competition may indicate that its stock is changing direction and ready for a steady rise.

The bearish case for Terran Orbital

Although things are looking up for Terran Orbital, like any company, it’s not without its challenges. In the recent past, Terran has been undergoing a bit of an identity crisis, which has led to staffing shortages.

In November 2022, three Terran executives resigned because they were not happy with the direction the company’s management was taking it — top management decided to pivot Terran away from CubeSats, its original area of operations, and toward the national security market.

At the time, Bell said “I want to do things to protect the national interest…Our future is working for the DoD and the IC.” However, Terran’s work with Rivada represents a departure from that recent mission statement, which could indicate a lack of direction and focus.

Additionally, unnamed sources close to Terran said in November that Terran was struggling to keep up with demand due to supply chain shortages. Given that some shortages are still ongoing, it is possible that Terran won’t be able to fulfill Rivada’s order.

Indeed, in Terran’s original press release, it noted that its announcement contains “forward-looking statements” and that “These forward-looking statements involve a number of risks…that may cause actual results or performance to be materially different from those expressed or implied by the forward-looking statements contained in this press release, including, but not limited to:…our ability to scale-up our manufacturing processes and facilities in order to meet the demands of this program;…our ability to manufacture a large number of satellites in the anticipated timeframe…”

So, while Terran expects that it will be able to meet the requirements of its contract, it’s not a done deal, and there’s still risk involved. Always do your due diligence before investing in a stock.

The bottom line

Spacecraft manufacturer Terran Orbital is the focus of a lot of excitement after being awarded a major contract by Rivada Space Networks. The $2.4 billion contract may be one of the largest ever given to a small satellite company, and Terran’s stock price is soaring as a result, gaining 71% on Wednesday.

Tech is a volatile industry, and no one can predict how a stock will perform in the future. Q.ai’s Emerging Tech Kit can help you navigate the rough waters and come out on top thanks to our AI-driven portfolio balancing algorithm.

Download Q.ai today for access to AI-powered investment strategies.