I hate to say "I told you so" -- but I did.

It's been nearly three months now since Lockheed Martin (LMT -0.21%) offered to buy out its satellite-building subcontractor Terran Orbital (LLAP) in a $600 million transaction that valued Terran at a whopping $1 a share.

At the time, Terran Orbital stock was selling for $1.20 per share, which made Lockheed's $1 offer seem not so great. Nevertheless, I argued that Terran was in such dire financial straits, carrying such a heavy load of debt and warrant obligations, and depending so heavily on a questionable contract to build satellites for a low-profile company called "Rivada Space Networks," that Terran's best course of action would be to "take the money and run."

Instead, Terran Orbital balked. Instead of agreeing to Lockheed's offer, the company swallowed a poison pill to stall Lockheed's takeover attempt, and mulled its options. Terran took its time, considered its options, and missed its chance to cash out -- and now it's just a penny stock, valued under $1 a share.

Haste makes waste -- but procrastination isn't such a great strategy, either

In an SEC filing earlier this month, Terran confirmed that Lockheed withdrew its offer to acquire Terran on April 30. In a separate letter, Terran reassured investors that it still has a "strategic cooperation agreement" in place, and will continue building satellites for Lockheed through at least 2035 -- even as management continues to mull its options.

Unfortunately for Terran, selling out to Lockheed, and making all its debt problems go away, is apparently no longer one of those options.

And then, two weeks later, the other shoe dropped.

Terran Orbital Q1 earnings

On Tuesday of last week, Terran Orbital announced its Q1 2024 earnings. And by "earnings," I mean "losses."

Q1 sales at Terran dropped 3.5% year over year to $27.2 million, even as the company's cost of sales rose 13%. By cutting selling, general, and administrative spending, Terran was able to hold its net loss more or less steady at $53.2 million. But even so, this was not a great look for a supposed growth stock. For every $1 in revenue Terran took in, it lost close to $2.

Management did its best to put a bright face on the results, noting that even if it's not growing much now, it still has a big book of future business -- $2.8 billion in backlogged work to be done. One problem with this is that $2.4 billion of this amount, or 86% of the company's claimed backlog, relates to the company's 2023 contract to build 300 satellites for Rivada's proposed satellite network.

The other problem is that $2.4 billion is the same value the Rivada contract was reported to have back in March. That means that since the contract was announced, Rivada has paid Terran almost nothing, even as Terran Orbital says it "continue[s] to execute on the program" -- and indeed, is already working on what it calls "precursor satellites" (presumably test satellites that would be launched ahead of deploying Rivada's full constellation).

In its post-earnings conference call with analysts, Terran Orbital didn't say outright that this is the reason why its revenue dropped but its cost of goods rose -- but it seems a logical conclusion.

What it means for shareholders

Long story short, Terran Orbital stock remains a tale of two stocks.

One, the stock investors bought hand over fist earlier this year, is a diversified manufacturer of satellites working for not only Lockheed Martin but also "Rivada." Unfortunately, Rivada is an alleged space company that no one seems to have heard of, and that according to data from S&P Global Market Intelligence, may have annual revenues of less than $5 million... but is somehow promising to pay Terran Orbital $2.4 billion to build it 300 satellites.

The other is a company almost wholly dependent on Lockheed Martin for its work, possessing a strategic alliance with the defense giant, that contracts to build "over 100 space vehicles" worth approximately $400 million. On the one hand, it's wholly beholden to Lockheed for its business. On the other hand, at least it knows Lockheed will pay its bills.

The problem for investors is that both these aspects of Terran Orbital stock are currently losing money, and forecast to keep on losing money as far out as any analyst is willing to make estimates. Terran Orbital had an opportunity to fix this problem in one fell swoop by selling out to Lockheed earlier this year, but missed its chance.

It may never get another.