The stock of space technology company York Space Systems, Inc plunged on Monday following an announcement by short-selling firm Wolfpack Research that it had taken a short position and issued a report targeting the company. The report highlights a significant risk from York's heavy reliance on a single customer, the Pentagon.
Wolfpack Research's report indicates that a staggering 96% of York Space Systems, Inc's projected 2025 revenue is derived from satellite sales to the Pentagon's Space Development Agency (SDA). However, the Pentagon announced in late April this year that it would cancel future funding for the SDA's "Tranche 2 Transport Layer" program and is proceeding to disband the agency.
The short seller further revealed that this transport layer program is to be replaced by a "Space Data Network." According to Pentagon budget documents made public on April 28, SpaceX's Starshield has been listed as the designated supplier for the Space Data Network. The documents do not mention any competitive bidding arrangements for a second satellite supplier.
Wolfpack Research also communicated with several former employees who criticized York Space Systems, Inc. They alleged the company engaged in deceptive practices to secure contracts with the SDA, cut corners in the production process, and delivered satellites whose critical mission software was not fully developed.
York Space Systems, Inc completed its IPO this past January, with its growth projections heavily based on continued supply to the SDA. The company is scheduled to hold its next earnings conference call this Wednesday. At the time of writing, York Space Systems, Inc has not issued a formal response to the short report.
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