Rocket Lab begins trading on the Nasdaq as RKLB after the merger of SPAC

Rocket Lab will begin trading on the Nasdaq on Wednesday, becoming the last space company to close a SPAC merger and go public, and add substantially to its cash stack during the process.

“We are very excited to bring a high-quality space asset to market,” Peter Beck, executive director of Rocket Lab, told CNBC.

The company merged with special-purpose acquisition company Vector Acquisition, which valued Rocket Lab at $ 4.8 billion in equity. The deal, and gross revenue of $ 777 million, will help the company grow its main small rocket business, further expand its spacecraft unit, and build a larger rocket called Neutron to deal with. to Elon Musk’s SpaceX.

“It’s a lot of capital … it really puts us in a position, not only to be aggressive in our organic growth, but also for our inorganic growth,” Beck said.

An SPAC collects money from investors through an initial public offering and then uses the cash to acquire a private company and make it public.

Shares of Rocket Lab fell more than 11% as it traded Wednesday since its previous close of $ 11.57. Asked about the first slide of the actions, Beck said he “hasn’t even been looking at it” and stressed that, “at the end of the day, we’re in this long term.”

Rocket Lab is one of the trends in space companies that are made public through SPAC offerings, with Virgin Galactic the first of its generation in 2019. Rocket builder Astra, AST & Science focused on satellite broadband, the Spire Global satellite data service and space delivery specialist Momentus have each started trading. BlackSky, Redwire, Satellogic and Planet are expected to continue in the coming months.

“I don’t think it will take long for investors to differentiate between the company that is constantly offering and those that have aspirations to deliver sometime in the future,” Beck said.

Founded by Beck in New Zealand in 2006, Rocket Lab is headquartered in Long Beach, California and has more than 500 employees.

Rocket Lab is the market leader in the small launch, with its Electron rocket carrying 105 satellites into space since its first orbital launch three years ago. The company is launching from a private complex on the Mahia Peninsula in New Zealand, and has built a launch pad at NASA’s Wallops flight facility in Virginia for Electron launches.

Rocket Lab maintains a strong position in the launch market alongside SpaceX, with the companies currently leading the two regularly launching private development rockets into orbit. Rocket Lab’s launch business recorded revenue of $ 13.5 million in 2018, $ 48 million in 2019 and approximately $ 33 million in 2020. Despite last year’s success, Rocket Lab expects launch revenue growth will pick up this year and steadily rise to $ 915 million in 2027.

But the launch market, generally divided into the three sections of small, medium and heavy lifting, is constantly growing. Rocket Lab’s Electron faces growing competition from rockets being built by those like Astra and Virgin Orbit, while Neutron will face rockets from SpaceX, United Launch Alliance, Firefly Aerospace, ABL Space and Relativity Space.

Beck’s company has recently been testing a method of recovering its Electron boosters (the most expensive part of the rocket) to reuse them, a practice SpaceX has routinely done. But unlike SpaceX, Rocket Lab has been testing a new approach given the small size of its rockets. The company uses the friction of the atmospheric entrance to slow down the rocket, then deploys a parachute and uses a helicopter to take off the reinforcement from the sky.

Rocket Lab hopes to carry out the first flight of a recovered Electron rocket reactor next year.

Beyond Electron, the company last year expanded its business to build spacecraft to join its rockets. Called Photon, Rocket Lab builds the spacecraft as a new versatile platform that companies and organizations can use to test and operate technologies in space.

The neutron, more than twice as high as the Electron and capable of carrying up to 8,000 kilograms to low Earth orbit, is the Rocket Lab’s passage into the rocket’s food chain.

The cash coming out of the bag is crucial for Neutron, as Rocket Lab expects to spend about $ 200 million to develop the next-generation rocket. Rocket Lab aims to launch Neutron for the first time in 2024.

Rocket Lab earlier this month updated its presentation for investors with a slide that said “a significant neutron revelation will occur soon.” Beck, when asked what the announcement will be about, said : “We’re so fed up with people copying us.”

“We keep our cards closer to the chest about Neutron,” Beck said. “The neutron should look like a rocket [designed] in 2050, right?

The company’s design for Neutron will be based on what has been learned by building and launching Electron. The new rocket booster, the bottom and most expensive of the rocket, will be reusable, similar to how SpaceX lands its Falcon 9 rocket launchers. In addition, Rocket Lab will build Neutron within the requirements to launch a spacecraft. to transport people, to be able to launch astronauts on the International Space Station.

Rocket Lab expects to launch Neutron from the Wallops flight facility and will build a new factory nearby. The company plans to open land at the new facility in the fourth quarter of this year.