Space Force’s HALO: A New Frontier in Satellite Technology
Attention, space investors! The Proliferated Warfighter Space Architecture (PWSA), a multibillion-dollar project by the U.S. Space Force, aims to deploy a network of Low Earth Orbit satellites for missile detection and defense. But alongside this initiative, there’s another exciting development: HALO.
Image source: Getty Images.
PWSA and the Emergence of HALO
The PWSA plans to launch as many as 700 satellites in various “tranches” that will provide communication and tracking capabilities across the globe. Major companies like Lockheed Martin (NYSE: LMT), Northrop Grumman, L3Harris, RTX Corp, and Rocket Lab are among the contractors already involved in this effort.
As PWSA begins the rollout of its Tranche 1 satellites, the Space Force is looking to expand the project with HALO, which stands for Hybrid Acquisition for Proliferated Low Earth Orbit.
According to SpaceNews, the Space Development Agency selected 19 companies for HALO, aiming to “accelerate the development of satellite technologies.” This initiative will allow participants to conduct experimental missions and potentially integrate their technologies into the PWSA framework. Of the 40 companies that submitted proposals, nearly half were chosen as “prime contractors,” allowing them to compete for future HALO contracts.
Opportunities Among Smaller Companies
While many of the selected companies are relatively obscure, some offer intriguing investment possibilities. There are five firms on the list that are either subsidiaries of publicly traded companies or are public themselves, making them accessible for investors.
The interest in smaller companies arises from the principle that larger firms often overshadow them. While big companies like Lockheed Martin may have greater financial strength, it’s often the smaller firms that can experience significant growth from winning a single contract.
In 2022, Lockheed Martin reported nearly $68 billion in revenue and over $6.9 billion in contract earnings. An additional $40 million in revenue would barely register as a blip on their financial radar. However, for a company like Capella Space, which earned only $12 million last year, or Muon Space, which reportedly had no revenue, a HALO contract could be transformative.
Each company awarded a task under HALO is expected to build and launch two satellites within 12 to 18 months. Past PWSA contracts have typically been valued around $20 million per satellite, meaning successful HALO contractors could secure around $40 million in revenue from a single project.
While this may not significantly impact a giant like Lockheed Martin, for smaller companies, it could pave the way toward going public, making HALO an effort worth monitoring closely.
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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Rich Smith has positions in Rocket Lab USA. The Motley Fool has positions in and recommends Amazon. The Motley Fool recommends L3Harris Technologies, Lockheed Martin, RTX, and Rocket Lab USA. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
