It’s already been about a month since Astra’s closing price on NASDAQ went below the $1 limit, which triggers some issues with the powers that be in New York. Since then, the stock price has continued to decrease in value as failed launches have led the company to shift to a new rocket design.
Astra’s poor stock price could get it delisted
Astra confirmed on Friday that it received a delisting warning from NASDAQ after its stock price closed under $1 for 30 consecutive days. This is a requirement both the NASDAQ and New York Stock Exchange have to ensure their investor’s money is safe and not prone to drastic sways.
Paired with the general decline of the stock market in recent months, Astra’s shares have continued to drop pretty much since the company went public last year. However, it took a steep downward spikes after the continued failure of its Rocket 3 family of launch vehicles. Now the company has dropped Rocket 3 for the new Rocket 4 variant, entering another round of R&D uncertainty as the question lingers, when Astra will begin customer launches again?
Rocket 3 did have some success, but it was not consistent. Out of its eight launch attempts, only two made it off the ground and put their payloads into orbit. Each failure brought forth new issues with the rocket. Astra’s most recent launch was for NASA and concluded after the two payloads failed to reach orbit. An FAA investigation is still underway to determine what exactly went wrong.
Since then, Astra has announced the grounding of its remaining Rocket 3 launches. The company will move on to Rocket 4. This caused NASA to move the remaining TROPICS mission to a new launcher, but NASA will remain a partner and find new payloads for Astra to fly. These two items have really not played well with investors, as Astra closed last Friday at only $0.59 a share.
What can Astra do to stay listed?
There are two options for Astra to keep its stock listed on the NASDAQ. The first is what we mentioned early, and it’s probably the hardest: bringing the share price up. Astra has grown since going public, acquiring other companies with the goal of becoming a one-stop shop for space access. However, with the core part of the company being a launch provider, and having that out of the question for the time being, it will prove difficult for the company to organically raise its stock price.
The second option will be to perform a “reverse stock split.” This is when a company combines shares so its shareholders lose their number of shares in the company but their value increases. For example, if Astra performed a 1-4 reverse stock split, a shareholder with four shares would decrease to only one share, but the price per share would be multiplied by four. This would meet the requirements for staying listed on the NASDAQ, but could just mean kicking the problem later down the road if prices continue to plummet.
What happens to Astra stock if it’s delisted?
If in 180 days Astra cannot raise its stock price above $1, NASDAQ will remove the company from its market. However this won’t mean trading of its shares ceases. If you invested in Astra, you will keep your shares and trading will be moved to “over-the-counter” markets. These markets have less regulatory protections, but they offer a spot for companies that can’t afford to be on the larger “listed” markets.
There are three major OTC markets that Astra could move to. The first is OTCQX, which has the highest level of protection – including mandatory reporting to the SEC. But even this market requires stock shares to be priced over $5, something that Astra would fail to meet.
Second is OTCQB, which is one step down from QX. There are fewer requirements for financial reporting and the minimum stock price is $0.01. The company also can’t be in the process of bankruptcy. This would make the most sense for Astra to end up, as OTCQB is designed for companies that want to be on the NYSE or NASDAQ but don’t want to worry about share price.
Finally are the pink sheets – pretty much the wild west of stock trading. I get vibes of Wolf of Wall Street brokers pushing you to spend your IRA investments on the hottest new company only they know about. Astra mostly likely would not end up here, as most of the companies on the pink sheets are bankrupt.
How in trouble is Astra right now?
That’s hard to say.
There seems to be no concern from the company as to its future, but one has to think alarms are going off in the CFO’s office. We will have to wait and see what happens to Astra if their stock continues to drop.