Astra Space, a space startup based in Seattle, has announced layoffs and workforce reassignments as it faces dwindling cash reserves. The company is reallocating 50 engineers from development of its Rocket 4 vehicle to focus on the production of its Astra Spacecraft Engine. Additionally, approximately 70 employees will be laid off in an effort to reduce costs. While these moves will delay work on Rocket 4, Astra did not provide an estimate for the extent of the delay. The company emphasized its commitment to fulfilling customer obligations and ensuring sufficient resources and financial stability. Astra’s ability to conduct paid commercial launches in the future will depend on the success of its initial test launches, which, in turn, relies on the resources allocated to launch systems development. This restructuring, therefore, plays a crucial role in shaping the company’s prospects.
In May, Astra’s CEO, Chris Kemp, stated that the company had no plans to end launch vehicle development despite the emphasis on spacecraft propulsion. Astra has received 278 orders for the Astra Spacecraft Engine, with an estimated value of $77 million, but has generated minimal revenue from these orders. In the first quarter of 2023, the company reported no revenue and anticipates approximately $500,000 to $1 million in revenue for the second quarter.
The lack of revenue has contributed to Astra’s cash burn, with the company expecting to finish the second quarter with $26 million to $26.5 million in cash and equivalents, lower than the forecasted $30 million to $33 million. Astra attributed this discrepancy to delays in collecting receivables from government work and the receipt of a tax credit. To mitigate its financial challenges, Astra plans to conduct a stock offering of up to $65 million and a 1-for-15 reverse stock split. Additionally, the company recently secured a $12.5 million loan from an unnamed institutional investor to support working capital and general expenses.
The layoffs at Astra reflect a broader trend in the space industry, where startups have faced financial difficulties and a cooling investment climate. Planet, an Earth imaging company, recently announced the layoff of 117 employees, citing increased costs and complexity following its public listing and changes in the economy. Other companies, including Ursa Major Technologies, Benchmark Space Systems, and Virgin Orbit, have also experienced layoffs in recent months.
Astra plans to release its second-quarter financials on August 14 and will hold a separate conference call on August 7 to discuss recent events. The company aims to navigate its financial challenges and continue pursuing its mission in the evolving space industry.