Rocket Lab becomes third rocket company to go public

Capitalism in space: On August 25, 2021 Rocket Lab became the third rocket company to go public, following Virgin Galactic and Astra to sign a merger deal with a special-purpose acquisition company (SPAC).

Nasdaq celebrated the milestone, inviting Rocket Lab founder and CEO Peter Beck to ring the market’s opening bell Wednesday morning.

The SPAC merger, with a San Francisco-based company called Vector Acquisition Corporation, provides Rocket Lab with about $777 million. The funds will aid the development of multiple projects, including Rocket Lab’s big, next-generation Neutron rocket, company representatives said.

Nor is this all. Virgin Orbit has also signed a similar deal this wee, and will begin trading stock soon.

All these deals indicate that the investment community is very confident in making big profits in space, and is now willing to commit a lot of cash to that prospect.

Morgan Stanley recommends buying Virgin Galactic stock

Capitalism in space: A report yesterday by Morgan Stanley recommended the purchase of Virgin Galactic stock because of its claim that it might repurpose its SpaceShipTwo suborbital spacecraft from space tourism to point-to-point transportation on Earth.

Morgan Stanley began coverage of Virgin Galactic’s stock on Monday with an overweight rating, saying the space tourism company’s shares will soar as it proves out a long-term plan of flying people around the world at hypersonic speeds. “A viable space tourism business is what you pay for today … but a chance to disrupt the multi-trillion-dollar airline [total addressable market] is what is really likely to drive the upside,” Morgan Stanley analyst Adam Jonas wrote in a note to investors.

…Morgan Stanley’s price target of $22 a share represents a 203% increase from Virgin Galactic’s current levels. The company outlined a three phase plan to investors during its roadshow earlier this year. While Morgan Stanley gave a $10 a share valuation to Virgin Galactic’s space tourism business, phases one and two of its plan, the firm sees $12 a share in value from phase three: Hypersonic point-to-point air travel.

The report caused the space company’s lagging stock to surge yesterday, though its value today ($9.41) remains well below its opening price ($12.53).

Personally I think anyone who takes Morgan Stanley’s advice is a fool. Virgin Galactic has spent fifteen years trying to develop this suborbital spacecraft, and has still not flown any customers. Moreover, the design is underpowered, which means I have serious doubts it could be used for any point-to-point transportation. To make that happen will require a complete redesign.

This recommendation by Morgan Stanley also suggests that this is not my investment firm of choice. The analysis here seems very poor and somewhat ignorant of the technology involved, and suggests instead that it was aimed merely to cause a jump in the price so that some of Morgan Stanley’s customers could get rid of their already-purchased stock without too much loss.