York Space Systems: short this unprofitable space stock
York Space Systems is a play on a booming sector – but it looks doomed and is absurdly overvalued, says Matthew Partridge
The space industry is booming. The falling cost of satellites and launches has stimulated great interest from both the private sector and the military users, while the imminent flotation of Elon Musk's SpaceX has also put the sector in the spotlight. Still, as with any boom, not every company will prosper, and this is particularly true if its core business is a competitor of SpaceX. A case in point is York Space Systems (NYSE: YSS), which went public at the end of January 2026.
At present, York Space Systems makes its money from selling satellites. The problem is that it makes virtually all of its revenue from just one client, the Space Development Agency (SDA), part of the US Space Force (the space branch of the US Armed Forces).
The SDA was using these satellites as part of its Transport Layer programme, with the aim of it building out a huge network of between 300 and 500 low Earth orbit satellites (between 750km and 1,200km above the earth) that could be used for targeting and communications purposes.
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York Space Systems is chronically loss-making
However, as Wolfpack Research has pointed out, the US Space Force recently decided not to fund the latest stage of the rollout, which effectively ends the programme. Instead, it will be pursuing a slightly different arrangement called the Space Data Network (SDN). The Space Data Network will also require satellites, so it's possible that York Space Systems could supply the SDN. However, this won't be easy, as it will have to convince the Pentagon that it can build satellites more cheaply and efficiently than SpaceX, currently the preferred provider for the SDN.
Even if it manages to sell its satellites to the SDN, York's position still looks shaky. It is chronically loss-making, with scant progress towards breaking even, let alone achieving profitability. Operating losses increased by 50% between 2023 and 2025. One sign of the group's desperation is that it has started buying other space-related companies, which is likely to deplete its remaining reserves of cash further. It could even start issuing more shares in order to raise cash. Despite all this, the stock still trades at almost eight times sales, the sort of valuation that you would expect from a company that was both fast-growing and profitable, not one that risks losing its biggest customer.
York's shares have been on a rollercoaster, falling almost immediately after it floated before bouncing back to the point where it was trading 25% higher than its listing price. However, the past few weeks have seen the share price collapse; it is down by nearly half from its recent highs, and trading well below both its 200-day and 50-day moving averages. I would therefore suggest that you go short at the current price of $24.02 at £100 per $1. In that case you should cover your position if it goes above $33.52, giving you a total possible downside of £950.
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