Be First in Line to Trade “The FedEx of Space”

That’s why the skies are filled with huge government-backed companies such as Boeing, Lockheed Martin, Northrop Grumman and Raytheon.

Or Elon Musk’s SpaceX, valued at over $70 billion with billions in its budget.

The rockets they launch into orbit are roughly the size of school buses. And a launch costs a company like SpaceX about $57 million per mission.

But one startup is changing the game, launching rockets priced at $7 million — just a fraction of the cost of other players and effectively serving an entirely untapped market.

And soon the “FedEx of Space” won’t just be an uninvestable startup. Because yesterday, it announced it’s going public…

Measuring up to SpaceX

In a deal valued at $4.1 billion, small-launch space company Rocket Lab will merge with special purpose acquisition company (SPAC) Vector Acquisition.

When the agreement closes in a couple months, the combined company will be called Rocket Lab USA Inc. and trade under the ticker RKLB.

After the deal was reported, Vector Acquisition shot up almost 30%. That values Rocket Lab at $6.4 billion — making it one of the most valuable pure-play space stocks.

It is the leader of its specialized small-launch market…

Rocket Comparison

Source: Rocket Lab

And it is one of two leaders that regularly launch privately developed rockets into orbit… the other being SpaceX, which is more than 12 times its size.

But unlike SpaceX, Rocket Lab has honed in on the small satellite market, which is why they’ve deemed themselves the FedEx of Space…

Its most-used rocket, called Electron, stands at only 55 feet — tiny compared with the 230-foot Falcon 9 SpaceX commonly uses.

Rocket Comparison

Source: CNBC

But being the biggest doesn’t always translate to being the best. Think of SpaceX as the cargo train that goes once every month, whereas smaller and cheaper rockets are more like the FedEx vans that come every day.

Small satellites, despite having become an integral part of space infrastructure, aren’t a priority for the big guys like SpaceX. So those kinds of satellites normally have to wait anywhere from four months to two years to try to hitch a ride on the next launch (delays like these can be very expensive).

It’s Rocket Lab’s small-launch model that allows for these satellites to get into orbit at lower costs and in more convenient timeframes.

And the company isn’t stopping there…

Looking Beyond

Yesterday, Rocket Lab also announced that it would be using part of the $750 million in cash from its SPAC merger to fund development of a bigger rocket, Neutron, which targets Falcon 9’s area of the space market.

Rocket Lab has stated that Neutron will be a direct alternative to SpaceX’s Falcon 9. It will be tailored for mega constellations, deep-space missions and human spaceflight.

The company also launched its first satellite built and designed in-house. It stated in its latest investor presentation, “Customers no longer have to build their own satellite. They can buy a launch, satellite, ground services and on-orbit management in a turnkey package.”

Rocket Lab is gearing up to be a serious contender in the satellite-as-a-service industry and is building its brand with free “stowaway” Rocket Lab satellites that go out with each customer launch.

Those stowaways are laying the foundation for a major constellation of its own.

The merger deal won’t take long and is expected to close in the second quarter of 2021, which is in the course of the next couple of months.

The FedEx of Space has big plans… and now with the funding to fully realize those plans, RKLB is worth a spot on your watchlist.

Onward and upward,

Robert Williams

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Robert Williams

After nearly 20 years in the trenches of high finance, Robert has joined St. Paul Research to assume the role of Chief Futurist. Robert cut his teeth as an analyst for one of the most revered and prestigious medical institutions on Earth, whose endowment is valued at $4.3 billion. From there, Robert became the lead...

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