Why Satellogic Stock Soared 24% Today

Here at The Motley Fool, I write a lot about space stocks. One space stock I have not written much about is Uruguay-based Satellogic (NASDAQ: SATL), which is halfway to completing a 90-satellite constellation for use providing high-resolution satellite photography to customers down on Earth.

But it's hard not to notice Satellogic stock today, as it shoots up 23.5% through 12:05 p.m. ET on a new contract announcement.

Satellogic's big news

This morning Satellogic announced it is tripling the amount of satellite data it provides to satellite data analytics company SynMax, for use by hedge funds and financial analysts who track oil and gas production around the world. In its press release, Satellogic notes it will be providing data on activity at more than 100 wellheads across North America. SynMax will then use artificial intelligence to process this data for insights to help analysts better estimate oil and gas production levels at these sites -- to better predict global oil supplies and pricing data.

Satellogic did not, however, state what financial implications this contract will have for it, either in terms of revenue or profit. This suggests that whatever the numbers are, they're probably not material to its business.

Is Satellogic stock a buy?

That could be a problem for investors, because despite what today's outsize surge in Satellogic's stock price might suggest, this is a company that could really use some profit. Over the last 12 reported months, Satellogic has racked up more than $64 million in net losses, and more than $55 million in negative free cash flow. For a company with less than $26 million in cash on hand, this implies that Satellogic might run out of cash within the next six months.

To stave off that prospect, Satellogic did announce today that it is selling $10 million in new stock to a provide buyer. That only suffices to keep the lights on for another couple of months, though. Unless and until Satellogic can earn some profit, I'm afraid the stock still looks too risky to buy.

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Rich Smith has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.