Why Spire Global Stock Just Rocketed to the Moon

Shares of satellite data and analytics company Spire Global (SPIR 18.22%) announced this morning that it will report its Q4 and full-year 2023 earnings after close of trading on March 6, 2024. The space company gave no details on what will be in those results. But even so, Spire Global stock rocketed 21.3% through 11:30 a.m. ET this morning.

Does that make sense?

Actually, it might, when you consider that just before announcing its earnings date, Spire also announced last night that it has a new partner.

What Spire said

This first announcement, released after close of trading yesterday, appears to be the real reason why Spire Global stock is soaring. Spire management revealed that it is partnering with British shipping technology company Signal Ocean “to leverage their respective strengths.

In this new partnership, Spire will provide data on shipping patterns tracked by its satellites, while Signal Ocean will feed this data into its own artificial intelligence programs — yes, like so much these days, this turns out to be an artificial intelligence (AI) story — aiming to “create new innovative solutions to propel the digitalization of the maritime economy while enhancing global security and transparency in our oceans.”

What this means is that Spire has found a new partner to buy the data that its satellites collect. And this partner will apply AI to this data to analyze it, outputting new data. Signal Ocean will then be able to sell this AI data to shipping companies, to tell them how to move their ships from Port A to Port B more efficiently. Or it could sell the data to analysts who want to know who is shipping what to where — so as to better understand what the global economy is doing at any given moment.

Is Spire Global stock a buy?

And even then, this is only half the story. On top of the partnership, you see, Spire announced that Signal Ocean will be buying a $10 million stake in Spire, paying $12 per share for 833,333 new shares of Spire.

When you consider that Spire stock cost barely $8 a share before this news was announced, the discovery that someone out there is paying nearly 50% more for Spire stock obviously got investors excited — because it implies that Spire stock is worth a whole lot more than it costs right now.

So, should you buy Spire stock, too? I honestly don’t know. At a valuation of just 2 times trailing sales, Spire shares sure look cheap enough — or they would if the company were earning at least a little bit of profit on its $100 million in annual sales. Most analysts who follow Spire, however, don’t see the stock turning profitable anytime soon, which to my mind means the stock remains a bit speculative.

Valued on P/S, Spire stock sure looks like a buy. But valued on P/E, it remains a gamble.

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.

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