On the 1st of March, Vector Acquisition Corp (NASDAQ: VACQ) announced its plans to take Rocket Lab public via a reverse merger. Rocket Lab is an end to end, aerospace manufacturer and small satellite launch service. To add to its credentials, in the history of spaceflight Rocket Lab is one of only two private companies that has delivered regular and reliable access to orbit, the other company being Elon Musk’s SpaceX. The transaction is expected to provide Rocket Lab capital to fund the development of a reusable Neutron launch vehicle. The vehicle is tailored for mega constellations, deep space missions and human spaceflight. This article will breakdown everything you need to know regarding the Rocket Lab and VACQ merger.
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Key details surrounding VACQ and Rocket Lab merger
Firstly, the merger is expected to raise $470 million from committed PIPE investors alongside an additional $320 million from Vector Acqusitions Trust Account. The VACQ merger is valued at $4.1 billion pro forma. In addition, the merger vote is expected to take place sometime in July however investors are awaiting confirmation on this. The combined company will trade on the Nasdaq, under the ticker symbol RKLB. This will allow for investors to purchase RocketLab shares directly from the stock market.
Furthermore, the cash proceeds from the transaction will also help fund growth in the space systems and applications market, enabling Rocket Lab to deliver data/servicesnfrom space. The space systems and applications industry is expected to grow to $1.4 trillion by 2030.
“Rocket Lab is a once-in-a-generation company that is democratizing access to space through its constant innovation, leading technology and proven execution… Rocket Lab is ideally positioned to continue to capture market share in the rapidly expanding space launch, systems and applications markets.” Alec Slusky, CEO of Vector and Founder & Chief Investment Officer of Vector Capital
Financial outlook for Rocket Lab over the next 5 years
Firstly, Rocket Lab has completed 18 seperate missions and launched 97 satellites to date. The company expects to generate $69 million in revenue in 2021 (96% YOY growth) and expects this to grow to $176 million in 2022. By 2025, Rocket Lab forecasts revenue to reach $749 million, with both space systems and launch revenue equally attributing to this growth. The 5 year outlook on revenue according to Rocket Lab look bullish, however the risk in space applications remains high. For Rocket Lab to meet these forecasts, they will need to ensure assumptions regarding expansion into the space systems and applications industry is successful. In saying this, its space systems business already has scheduled missions to the Moon in 2021 and Mars in 2024.
Summary on Rocket Lab Merger
In conclusion, the merger looks to provide an exciting new chapter for Rocket Lab and VACQ investors. Furthermore, the funds raised from the transaction will allow for expansion into the space systems and applications market. However, the merger will not be finalised until Q2 2021 assuming all requirements are met. The revenue forecasts as discussed suggest strong growth in both the launch and space systems industry. But investors should tread with caution, as many hurdles will need to be met in such a dynamic industry.
Written by Tyger Fitzpatrick
The information above is not financial advice. Youth Investment Group has no liability for personal financial interests or investment decisions. You should make your own investment decisions based upon your own research and what you believe is best for you.
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