RKLB Stock Jumps Nearly 17% — Analyst Says Rocket Lab’s Iridium Deal Isn’t A Starlink Competitor Play

• The analyst says concerns that Rocket Lab’s (RKLB) Iridium deal positions it against Starlink are the “wrong take.”
• Iridium’s L-band spectrum is designed for low-bandwidth, high-reliability use cases like tactical communications and IoT, not broadband internet.
• Craig-Hallum calls the $8-billion acquisition “transformational,” adding a third pillar of application services to Rocket Lab’s launch and space systems business.

Rocket Lab USA Inc (RKLB) shares jumped nearly 17% during Monday afternoon’s trading session after Craig-Hallum said the company’s planned $8 billion acquisition of Iridium Communications Inc (IRDM) is not a move to compete with SpaceX’s (SPCX) Starlink. The firm called that interpretation the “wrong take.”

The firm added that Iridium’s lower frequency L-band spectrum has inherently lower throughput capacity but offers a more stable signal that propagates better through dense foliage and walls.

Shares of Iridium were trading nearly 25% higher on Monday at the time of writing.

Iridium’s Spectrum Positioned For Different Use Cases

Craig-Hallum told investors in a research note that instead of providing consumer broadband like Starlink, Iridium’s services are better suited to its spectrum’s strengths, including assured PNT, assured tactical communications, and low-bandwidth Internet-of-Things use cases, according to TheFly. The firm added that these markets are not ones Starlink is servicing, which is why Iridium has continued to grow despite the rapid rise of Starlink.

Craig-Hallum raised the firm’s price target on Rocket Lab to $120 from $98, which implies nearly 42% upside from its last close, and maintained a ‘Buy’ rating.

The firm views Rocket Lab’s acquisition of Iridium (IRDM) as “transformational” and “on the mark,” adding that Iridium is “highly complementary” to Rocket Lab’s core launch and space systems business.

The analyst said the deal adds a third leg of application services to Rocket Lab’s business and believes it will be “nicely accretive” to earnings while helping fund the company’s future growth initiatives.

RKLB-IRDM Acquisition Deal

Earlier on Monday, Rocket Lab announced plans to acquire Iridium in a cash-and-stock deal valued at about $8 billion.

The company said the acquisition will combine Rocket Lab’s launch and satellite manufacturing capabilities with Iridium’s global satellite communications network and L-band spectrum. This will create a vertically integrated space company that can design, build, launch, and operate its own satellite constellations.

Rocket Lab also said the deal will give it exposure to space-based applications such as satellite internet of things, direct-to-device communications, and positioning, navigation and timing services, while adding a recurring revenue business.

RKLB and IRDM Stocks: What Stocktwits Retail Sentiment Says

On Stocktwits, retail sentiment for RKLB was ‘bullish,’ unchanged in the last 24 hours, while message volume was ‘high.’ Over the past 30 days, message volume around the stock has surged nearly 170%, while the watcher count has risen 5.6%.

For IRDM, sentiment flipped sharply to “extremely bullish” from “bearish” a day earlier, while message volume hit “extremely high” levels. In the past 30 days, message volume around the stock has surged a whopping 9,400%, while the watcher count has risen 1.6%.

While RKLB stock has gained over 40% year-to-date, IRDM shares have surged nearly 217% in the same period.

Also See: Why WULF Stock Still Has 40% Upside After Nearly 500% Surge In Past 12 Months — Here’s What Citi Says

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