![]() This isn't new news of course, everybody knows this, but we've yet to see it truly reflected in the stock, which remains in the $11 zip code. We think that once VACQ / Rocket Lab completes, the high profile nature of the company and its backers is likely to appeal to institutions, and we think that demand pressure on the stock can lift it. One effect of the SEC's attention on SPAC warrant accounting was to restrain professional investor enthusiasm for the SPAC cohort - that's one reason why pre-merger SPACs are all trading in such tight zones right now, tethered to the notional $10/share "cash value in the trust account" number that most adopt at creation. But what a completed merger is likely to deliver is more institutional interest in holding the name. That the merger date is likely near and does not change the nature of the investment. Rocket Lab / VACQ has seen few challenges - as we allude to above, the company did have to restate its accounts following the SEC's decision that SPAC warrants could not be classified as simple equity instruments, but since most all SPACs in this cohort were similarly affected, that does not seem to have knocked the story off course.Īll SPAC deals we have covered in recent years are the essence of speculation and this is no different. ![]() The merger may yet happen and it may well be a big success, but it has not been easy thus far. not least security clearance issues and then, recently, a big valuation haircut. ( SRAC) hit a few potholes in its planned acquisition of Momentus Space, Inc. We've seen, for instance, Stable Road Acquisition Corp. Now, the rider here is that you never really know ahead of time when these SPAC mergers actually complete, but you can usually get a sense of whether there are any major bumps in the road. So we think now is a good time to buy a new position, or add to existing holdings, in VACQ, because risk has fallen and price has barely risen. The merger completion is likely drawing near, which means the risk level of owning VACQ is likely falling, but the market has not yet moved the stock up in response, in our view. ![]() ![]() "We Remain At Buy On Rocket Lab" May 2021 - This covers the aftermath of recent SEC attention on SPAC capital structures and the VACQ response thereto."An Opportunity To Make A Venture Capital Investment In Space" March 2021 - This covers underlying fundamentals, deal mechanics and risks, and.If you haven't read those notes yet, and you're either a VACQ shareholder or thinking of becoming so, you can do so at the following links: We put together detailed notes on Rocket Lab financials and on the mechanics of the VACQ / Rocket Lab deal recently - those notes remain fresh, since there's been no updated financials from Rocket Lab and no change to the VACQ deal terms. The company is early in its development of re-usable craft - its bigger and better-known compatriot SpaceX ( SPACE) is way further down the line on this front - and it has plans to operate a satellite constellation of its own, which we think is probably a good move since the launch sector is crowded and getting more so. The company develops, builds and operates the Electron launch system which predominantly appeals to small satellite customers. For the uninitiated, Rocket Lab is the leading low-cost launch services provider in the space sector. (NASDAQ: VACQ), a SPAC with a very grownup lead sponsor (the San Francisco technology buyout shop Vector Capital) and a very prominent outside investor (Michael Burry), is in the middle of its proposed merger deal with Rocket Lab. Still On The Pad But Fueling Has Nearly Completed values both its independence and transparency and does not believe that this presents a material potential conflict of interest or impacts the content of its research or publications. Companies referenced in this note or their employees or affiliates may be customers of Cestrian Capital Research, Inc. Any opinions, analyses, or probabilities expressed in this note are those of the author as of the note's date of publication and are subject to change without notice. Cestrian Capital Research, Inc., its employees, agents or affiliates, including the author of this note, or related persons, may have a position in any stocks, security or financial instrument referenced in this note. Nothing in this note is intended to be investment advice and nor should it be relied upon to make investment decisions. Any information or analysis in this note is not an offer to sell or the solicitation of an offer to buy any securities. DISCLAIMER: This note is intended for US recipients only and in particular is not directed at, nor intended to be relied upon by any UK recipients.
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