Spire Global Stock Has Key Strengths, Important Weaknesses

Spire Global (SPIR), which specializes in launching small satellites that generate data using RF systems, has several positive attributes. Specifically, it is growing significantly; it has developed important relationships with Elon Musk's SpaceX (SPCX) and the National Oceanic and Atmospheric Administration (NOAA), yet its valuation remains rather low.

Still, Spire appears to be very reliant on NOAA for a rather large portion of its overall revenue, while the company's competition could increase tremendously in the medium-to-long term.

Consequently, investors should consider steering clear of Spire Global's stock for now.

Meaningful Growth, Important Relationships, and a Low Valuation

In the second quarter, Spire's revenue climbed 16% versus the same period a year earlier to $18 million, excluding the impact of its maritime business, which it sold last year. And for the full year, the company expects its sales, again excluding the maritime unit, to jump about 50%. (The latter figure is based on the midpoint of the company's 2026 revenue guidance range of $75 million to $85 million).

Spire utilizes SpaceX's rockets to launch its satellites, and this arrangement appears to be flourishing. In fact, on October 2, Spire announced that the first three satellites assembled at Spire's factory in Boulder, Colorado, had been propelled into orbit by SpaceX's rideshare mission.

Meanwhile, NOAA is seemingly quite impressed with Spire, as the agency in recent months gave the company two sizable contracts. Specifically, in August, Spire disclosed that it had received a two-year, $28 million deal from NOAA “to advance hyperspectral microwave sounding technology toward operational use for weather forecasting.” And in September, the firm announced that NOAA had given it another two-year contract, this time for $33.2 million. Under the latter agreement, Spire will deliver global navigation satellite system radio occultation (GNSS-RO) data to the agency.

Finally, SPIR's forward price-sales ratio of 4.35 times, based on analysts' average 2027 revenue estimate for Spire, is rather attractive, given the firm's high expected growth this year.

Concentration Risk and Potential Competition Issues

Spire's two combined contracts with the NOAA are worth slightly over $50 million over a two-year period, representing an annualized total of just above $25 million. And the company, as noted above, expects its 2026 revenue to come in at about $80 million. So it appears that NOAA is generating a considerable proportion of the company's revenue. As a result, if the agency decides down the road to reduce its utilization of Spire's satellites, SPIR stock will likely tumble tremendously.

On the competition front, many sizable firms, including Telesat (TSAT), BlackSky Technology (BKSY), and Iridium Communications (IRDM), appear to be Spire's rivals to some extent. In the longer term, Amazon (AMZN), which is expected to soon activate its satellite-based broadband network, and SpaceX itself could decide to offer the identical services as Spire. Specifically, they could equip their satellites with the same or similar data-tracking equipment that Spire now uses, enabling them to carry out comparable tasks.

The Bottom Line on SPIR

With the company seeking to expand the revenue that it obtains from commercial weather entities and governments searching for a backup to RF communications that are occasionally being jammed, Spire's revenue from sources besides NOAA could soar over the longer term. Indeed, SPIR CEO Theresa Condo, speaking on the company's Q2 earnings call, reported that “four new international customers” had purchased Spire's RF geolocation services. If the positive scenario unfolds, the company's shares could be worth buying. But until that point, SPIR stock seems too risky to buy, despite its significant strengths.

On the date of publication, Larry Ramer had a position in: AMZN , AMZU . All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.