What happened
Vector Acquisition (VACQ), a previously little-known special purpose acquisition vehicle, or SPAC, that went public three months ago, roared to life on Monday, surging 36.5% by noon EST -- and pulled the rest of America's nascent "new space industry" higher with it. The reason: At long last, Vector is bringing space company Rocket Lab public.
In addition to Vector, as of noon, we saw shares of Virgin Galactic (SPCE -11.74%) up 4%, Holicity (HOL) up 15.6%, and Stable Road Acquisition (SRAC) up 19%.
Image source: Getty Images.
So what
What do these four companies have in common? First and most obviously, they constitute a new class of space stocks that have come public via SPAC IPO. Virgin Galactic blazed the trail for the space industry coming public via SPAC in late 2019 when it became one of the first of a series -- now a torrent -- of companies avoiding the traditional IPO route and coming public via SPAC instead.
Following in Virgin's footsteps came Stable Road, which announced in October 2020 that it will bring "space tug" company Momentus public, and then Holicity, which last month said it would do the same thing to small rocket company Astra.
But here's the thing: Momentus is a neat space play inasmuch as its space tugs have the potential to help push satellites into their proper orbits, and Astra could succeed as a new provider of launch services for small satellites. But Rocket Lab has vehicles ("Electron" rockets and "Photon" tugs) that perform both of these functions already. Over the past four years, Rocket Lab has already successfully delivered more than a dozen payloads to orbit -- more than any other U.S. rocket company outside of United Launch Alliance or SpaceX has accomplished in such a short period of time.
Now what
And now Rocket Lab is going public under ticker symbol RKLB.
As Vector Acquisition announced this morning, it will combine the Rocket Lab merger with a $470 million private investment in public equity (PIPE) transaction to bring it public in Q2 2021, targeting a market for "space systems and space applications" valued at $1.4 trillion by 2030. The company expects Rocket Lab to fetch a $4.1 billion "implied pro forma enterprise value" when it goes public, and therefore a market capitalization of about $4.85 billion once the company's $750 million in post-IPO cash is factored in.
Rocket Lab intends to use these funds to develop a newer, bigger rocket to expand its launch capabilities past what its small Electron rocket can already perform, developing a "Neutron" rocket capable of lifting 8-ton payloads to orbit -- and of carrying astronauts to orbit as well. And the company says it will generate "positive adjusted EBITDA in 2023, positive cash flows in 2024 and more than $1 billion in revenue in 2026."
No wonder space investors are excited.
