To the moon is popular phrase that might get used to describe a stock that’s price is skyrocketing (pun intended). In the case of Rocket Lab, the phrase could be a bit more literal. I’m no financial expert but the opportunity to invest in pure space companies is very exciting to me, especially newer companies that are pushing the envelope. That’s why Rocket Lab’s announcement was a pleasant surprise this morning.
Rocket Lab USA Inc. announced that it will be going public through an acquisition by a special purpose acquisition company also known as a SPAC. The SPAC in this case is Vector Acquisition Corp. The deal values the company at $4.1 billion and is expected to close in the second quarter of 2021. After that, Rocket Lab will trade on the Nasdaq under the stock ticker RKLB, allowing anyone to get a piece of an innovative and promising launch and space systems company.
To add a little background; a SPAC is a essentially a shell company, not much more than a name and a lot of money, looking for a company with real assets to acquire. Once they find a promising company, they merge and the SPAC which is already publicly traded, will change its name and symbol on the stock exchange to reflect the company it acquired. This method of going public is a fairly new process but has been enthusiastically received as a cheaper and faster way for smaller companies to become publicly traded.
To accompany this exciting first announcement is a second one that is increasing enthusiasm for the deal. Rocket Lab unveiled its new rocket, a medium-lift rocket called Neutron. With a length of 40 meters and a fairing diameter of 4.5 meters, Neutron will be significantly larger than the existing Electron rocket and it will also be a big step further. The first stage will be reusable and it will have a payload capacity of 8,000 kg to low Earth orbit (LEO) or 1,500 kg to Mars or Venus. This interplanetary capability is what may allow Rocket Lab to literally go to the Moon.
Even more exciting is that the rocket will be designed to be human spaceflight capable. This will provide even more domestic launch capabilities for the United States as the rocket will be launching out of Virginia in the future. This is just speculation, but if Neutron is as cost effective as Electron, this may also provide human space flight opportunities to other nations without their own domestic launch capabilities.
Another benefit to Rocket Lab as a public company is that it is not solely a launch company. They also have 2 variations of a satellite bus for sale that can be used to host a variety of payloads in orbit or on interplanetary missions. The bus of a satellite is the body that contains the power supply, propulsion, avionics, etc. for the satellite and allows it to operate in orbit, whereas the payload is comprised of the sensors, instruments or communications equipment that you need for the spacecraft to accomplish its desired mission. Selling a standardized bus is an excellent diversification for the company so it doesn’t only have to rely on consistent revenue from launches.
When the deal goes through it will join Virgin Galactic as a publicly traded company, and other companies such as Astra and Momentous on their way to become public. For me investing in space companies is well worth the risk to own a piece of my passion and the future. But as I stated before I am not a financial expert and this is not investment advice.