Stock Market Fluctuations: Rocket Lab Experiences Ups and Downs Today
Sure thing, here's a fun, unapologetic, and straightforward take on the Rocket Lab situation:
Rocket Lab: A Cosmic Rollercoaster Ride 😎
Stock in this cool space startup, Rocket Lab (RKLB 3.25%), took investors on a wild ol' space ride on Wednesday! Prices skyrocketed over 11% in pre-market trading, and although they're still up almost 9%, they've been falling steadily since. As of 11:35 a.m. ET, Rocket Lab shares are only hanging on to a tiny 0.5% gain.
So what's the deal? Why the initial jump, and why did they give up most of it? Let's blast off and find out!
Good tidings from Rocket Lab
First things first, Rocket Lab's dropping some serious cash on a German subcontractor called Mynaric AG. They're coughing up $75 mil upfront, with an additional potential $75 mil down the line if Mynaric's biz performs like a charm. Mynaric manufactures nifty laser communication devices that transmit data over long distances in space, air, and on land.
Secondly, Rocket Lab announced that aerospace heavyweight, Airbus (EADSY 1.08%), inked a deal to get Rocket Lab to supply 200 "space grade solar panels" for 100 of OneWeb's Low Earth Orbit (LEO) satellites that Airbus is building for Eutelsat. No financial details were given, so we don't know exactly how much Rocket Lab is making off this deal.
The not-so-good news
The need for a quick $75 mil, and potentially an extra $75 mil down the line, puts some serious pressure on Rocket Lab. To help them out, Rocket Lab issued a heads-up saying they might need to hawk up to $500 mil in fresh shares.
Now don't get your galactic briefs in a bunch; they didn't confirm that they're definitely going to hawk those shares. Some or all of the Mynaric purchase price might be paid in Rocket Lab shares, and they've got over $400 mil in the bank (plus a hefty $475 mil in debt) right now. But hawk $500 mil in shares at today's price would mean flinging an incredible 28 mill shares out into the market, which would dilute the shootin' heck out of current shareholders by around 6%.
Probably why Rocket Lab lost most of its gains today.
🚀🚀🚀 Happy (inter)stellar traversing! 🚀🚀🚀
- Rocket Lab, the space startup, is investing $75 million upfront in Mynaric AG, a German company that manufactures laser communication devices, with an additional potential investment of $75 million.
- Mynaric's devices transmit data over long distances in space, air, and on land, and this investment serves to strengthen Rocket Lab's capabilities in this area.
- Airbus, an aerospace heavyweight, has signed a deal with Rocket Lab to purchase 200 "space grade solar panels" for 100 of OneWeb's Low Earth Orbit satellites, though the financial details of this deal are undisclosed.
- To fund this investment and potential future expenditures, Rocket Lab announced that it may issue up to $500 million in new shares, which could potentially dilute the value of current shareholders by around 6% if sold at current prices.
