![]() ![]() The business plan is typically venture-capital hockey stick and we make no comment on this save that there are a lot more hockey stick shaped charts in pitch documents than there are in SEC 10-Q and 10-K filings. Rocket Lab's strategy, as you can read in their presentation, is to continue to provide launch services, and in addition move beyond this to operate their own fleet of programmable repurposable small satellites, capacity on which they will make available to others. It means capex under control and good billings & payments discipline. If you think about what this company does - builds and launches rockets - then the modest delta between accounting profit (EBITDA) and cashflow (UFCF) is pretty good. That means they understand and care about managing capex and working capital. UFCF is included in the presentation because the SPAC DNA is buyout DNA. The investor presentation ( here) details a company with the following financials: The available financials are fairly scant at this stage. It's a real company, with revenues and cash in the bank already. The company counts various government bodies as customers and has a reputation for delivering on orbit, on time. Rocket Lab is a leader in low mass, low cost-to-orbit launch services and is moving on to develop reusable craft. ![]() This is what's on offer from Vector Acquisition Corp ( VACQ), the SPAC set up by the west coast technology buyout firm Vector Capital. Sometimes it is good to have rules about who can do what, when and why.īut until the SEC cracks down on these things, you can have at it if you want to. We cannot say that "democratizing" everything (a total misnomer but since that's the word in use, that's the word we'll use) is a good thing. Whether that turns out to be a good or a bad thing as an asset class, only time will tell. Whether that bad name returns, who can say? But for now, they open up an opportunity to risk your money on venture-capital style plays with traded tickers. These structures have been around since the dawn of time and had a bad name for a long time. As you likely know already, a SPAC is a bag of money looking for something to do before it has to give the money back to its rightful owners, the SPAC investors. Otherwise known as the subsidy check.Īs is the current trend, Rocket Lab is shortly to trade on the main markets by way of a merger with a special purpose acquisition company, or SPAC. Smaller, cheaper, can't carry as much stuff and won't impress your buddies as much, but it gets you there on time and you still get the EV good feeling. Rocket Lab, a privately-owned VC backed company today, builds and operates Electron rockets which are to the SpaceX Falcon 9 what a Model 3 is to a Model S. The cheapest and easiest way to put something cheap into orbit is to ask Rocket Lab to do it for you. None of us can be bothered to install proper videoconferencing kit, because it is (1) too expensive and (2) too difficult, which is why "to Zoom" is a verb and "to Tandberg" isn't. Netflix destroyed Blockbuster not because of something exciting about MPEG encoding but because we're all too cheap to spend money on gas going to the video store. Parsimony wins, because deep down we're all cheap. People say "technology wins", but that's just a means to an end. Because in most any category you can name, low cost wins in the end. So in tech, if you're looking long term, be long the new thing and hold on for dear life when it gets difficult and stressful. Generally speaking, this is a great strategy in any industry that has been set upon by the forces of innovation. And one of those motifs is find the lowest cost viable player in any market, own it, and ride it for as long as it's riding its own deflationary wave. If you read our work in tech and space stocks, you'll know we have a handful of repeating themes, motifs if you will. 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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