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Why the SKY and Space Global Ltd (ASX:SAS) share price rocketed 22% higher today

The SKY and Space Global Ltd (ASX: SAS) share price has had a fantastic start to the week.

At one stage the global communication infrastructure and services provider’s shares were up as much as 22% to 6.5 cents before giving back some of their early gains.

At the time of writing SKY and Space Global’s shares are up 7.5% to 5.7 cents.

Why did SKY and Space Global’s shares rocket higher?

This morning the company released a company update which appears to have been well-received by the market.

According to the release, the launch of the first batch of its equatorial Pearls nanosatellites remains on track for 2019. The final design phase is now nearing completion with Gomspace, and construction of the first Pearls is due to commence shortly.

Should they launch successfully they will form the world’s first fully autonomous nanosatellite communications network that will provide comprehensive narrowband connectivity services.

Multiple binding commercial agreements have been secured, including details of specific payments to the company, which include minimum orders and pricing. This means revenue generation is potentially just around the corner, all being well.

In addition to this, management has advised that new ground-breaking network management and data compression software was recently developed and successfully tested by the Sky and Space Global team. Management believes this development adds to the core IP asset base of the company.

Should you invest?

While it is good to see that the company is on track to launch its nanosatellites next year, I didn’t really see anything in today’s release to justify a 22% rise in its share price.

I think Sky and Space Global is one to watch closely over the next couple of years as I do believe the technology has a lot of promise. However, I wouldn’t be a buyer of its shares until it is generating meaningful revenues.

Until then, I think the likes of Over The Wire Holdings Ltd (ASX: OTW) and Macquarie Telecom Group Ltd (ASX: MAQ) may prove to be better options.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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