Urthecast (TSX:UR, Stock Forum) became a market darling when it announced back in October 2013 that its two cameras, one medium resolution, one high resolution, were ready to ship into space to be installed on the Russian segment of the International Space Station. The cameras were then going to gaze back down on Earth and stream back pictures and video for anyone willing to pay for the service.
The company began signing distributors, and with each announcement, saw another bump in share price. The market remained supportive even as the company worked through technical issues involving the installation that delayed testing.
However by the time Urthecast announced the units were operational at the beginning of April and released the first images from its medium resolution camera, the bloom had begun to come of the rose.
Share prices tumbled ~49% in two months as investors waited somewhat impatiently for the company to bring the two units into commercial production. Troubles in the Ukraine also compounded the problem with some investors worried that mounting tensions would result in either Russian anger or international sanctions blocking access to the cameras.
Undaunted, Urthecast continued pushing ahead with its operations and as a result, the company announced today that it had completed the commissioning of its medium resolution camera (MRC) and the unit was now able to provide commercial content to clients. Unfortunately, the same couldn't be said for the high resolution camera (HRC).
The International Space Station isn't entirely stationary and because of the high-degree of accuracy required in the operation of the HRC, the company reported problems with its ability to aim the unit accurately enough to achieve the quality necessary for commercial sale. In a conference call today, the company explained that the issue with its flagship offering could be resolved but would probably delay the commissioning of the HRC until the fall. There's a repair that can't be cheap.
Enough investors ran from the building screaming to send the stock on a downward spiral. However there remained a good deal of longs with enough confidence to hold on for what some would describe as a “heck of a ride” noting contracts with NASA and extremely positive coverage by analysts at Clarus Securities which stated that the company was due to hit a one-year $5.50 target price, implying a 274.1% return at the time of publication.
These delays and extra costs have definitely shaken out the flighty inexperienced investors, but whether or not they have left those remaining with the potential of an astronomical investment opportunity is still a point of debate.
Shares fell 22.41% on the news to $1.35 per share.
Currently there are 64.5m outstanding shares with a market cap of $87.1 million.