UPDATE 1-Astra Space founders propose buyout at fraction of 2021 valuation

(Updates shares in paragraph 3, adds background on mission failures in paragraph 4, analyst comment in paragraph 6)

By Akash Sriram

Nov 9 (Reuters) - Astra Space founders Chris Kemp and Adam London proposed to acquire the small rocket maker once valued at more than $2 billion for $27.8 million, according to a regulatory filing on Thursday.

The offer price of $1.50 per share represents a premium of about 103%, based on the stock's closing price on Wednesday.

The company's shares, which surged about 80% on Thursday, have fallen 99.6% since Astra went public in 2021 after a few mission failures and delays in test flights in an industry dominated by Elon Musk's SpaceX.

Only two of Astra's five launches since going public have been successful, one of which was for the U.S. Space Force and the other was a rideshare mission for on-orbit servicing company Spaceflight, where all payloads were deployed successfully.

Delays, high costs to develop, test and deploy rockets as well as a tight access to capital have shrunk valuations of space companies, including Satellogic and Virgin Galactic, that were once valued at billions of dollars.

"Since Astra's multi-billion dollar valuation a couple years ago, the space and growth market has essentially collapsed and Astra has experienced a series of launch failures, loan defaults, and other struggles," said Justus Parmar, founder and CEO at venture capital firm Fortuna Investments.

Astra, which went public with a blank-check firm at a $2.1 billion valuation, laid off a quarter of its workforce in August and diverted focus from its rocket launch program, once a core part of its business to satellite propulsion systems.

The company was looking to selling a 51% stake in its in-space propulsion business, among other strategic sale options, Bloomberg News reported in October.

(Reporting by Akash Sriram in Bengaluru; Editing by Shinjini Ganguli)