Rocket Lab Just Made an $8 Billion Bet to Rival SpaceX. Is the Stock a Buy?
Is buying a profitable satellite network outright the smartest money this launch company has ever spent?
Overview
Space company Rocket Lab (NASDAQ: RKLB) has spent the better part of a decade learning to build and launch rockets. This week, it agreed to buy a satellite business instead.
The company said it will acquire satellite operator Iridium Communications (NASDAQ: IRDM) in a cash-and-stock deal worth about $8 billion -- a sum equal to about 13% of Rocket Lab's own market value, and one that brings billions of dollars in new debt. Investors liked what they saw. Rocket Lab shares jumped about 16% on the news, and Iridium's soared about 25%.
Details
The ambition isn't subtle. Rocket Lab wants to look more like SpaceX -- a company that builds rockets, launches them, and runs its own satellite network on top. The question for investors, however, is whether buying into that vision this early, and at this price, makes the stock a buy.
Source
Originally published at www.fool.com.