Why BlackSky Technology Stock Was Crushing It This Week

One of the hotter stocks on the market doesn't even reside on Planet Earth... at least, as far as its main business is concerned.

For the second week in a row BlackSky Technology (NYSE: BKSY) was posting double-digit gains in its share price, thanks mainly to a new government contract it was awarded. The digital satellite imagery company's stock was up a very impressive 44% week to date as of Friday early morning, according to data compiled by S&P Global Market Intelligence.

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24 million reasons to be happy

On Tuesday, BlackSky announced that it had been awarded a contract from the U.S. Department of Defense's National Geospatial-Intelligence Agency (NGA) to monitor military and economic complexes. The arrangement has a duration of four years, and the company said it is worth over $24 million.

Image source: Getty Images.

That contract is already producing revenue for BlackSky; in its press release touting the award, the company said it has received an initial "base and surge option" payment of $2 million.

BlackSky already had momentum behind it even before the contract was announced. Early last week it announced plans for a new set of multispectral, large area collection satellites, christened Aros. It has secured a partner it did not identify to help develop these next-generation "birds," which it aims to launch in 2027 at the earliest.

Remember: Space stocks are speculative

While the just-inked contract and the big plans for new satellites are impressive developments, up to a point, investors need to remember that BlackSky is still a relatively early-stage company. It is also a space stock, which in itself is a highly speculative type of business. BlackSky is very expensive in terms of valuations just now, so I'd be very careful in considering it for any equity portfolio.

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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.