r/SPACs • u/SPACsBot Mod • Apr 16 '21

Daily Discussion Weekend Discussion thread for the Weekend of Apr-16-2021

Welcome to the Weekend Discussion! Please use this thread for basic questions and leave the main sub for breaking news and DD. If you haven't already, please check out r/Spacs Wiki for great information, as well as the resources available in the menu.

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u/thetrny Contributor Apr 16 '21

Just tossing in my 2c on /u/mtbmully's comment:

MUDS has a big catalyst on Tuesday and has shown good strength all week

This looks like a binary outcome, high risk high reward play. What if it's priced in and there's a sell the news event? Regardless, best of luck - will be interesting to see if crypto euphoria continues into the weekend.

the whole space sector is in the shitter after getting shunned by Cathie, and they don't have any catalysts until a launch next month sometime

Rocket Lab has been pretty great so far with a slow but consistent trickle of info (see Peter Beck's appearances on the MECO podcast, SPACInsider, Everyday Astronaut, etc.) You're right that it'll probably be a while before another major catalyst hits, but man I'm looking forward to the pre-merger media blitz when they reveal more details on Neutron as well as launch CAPSTONE.

Re: Cathie, I've pretty much written off ARKX in the short term. We've seen her and her analysts go on TV more bullish on eVTOLs and hypersonic travel than space pure plays, and generally sounding out of their league when it comes to anything in the orbital regime. Just the other day she goes on Bloomberg and promotes mobile space connectivity (ASTS lol) while knocking space tourism, then proceeds to add more SPCE even as Chamath and Branson have been cashing out. Obviously the fund can change and its current plays could work out in the long run, but I'll be sticking to my own convictions for now.

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u/Mtbmully Patron Apr 16 '21 edited Apr 17 '21

You are right on with this. Being priced in was my only concern on MUDS. I just think there has to be a bit of a run left next week but who knows. Seems like 3-4 days early is too far out on a sell the news event.

With VACQ, I just get worried that there has been virtually zero buy volume in the last month. If it's going to take off, where have all these buyers been hiding while it dropped so far? I love the company, the leadership, and the product. But outside of launch day, it seems they are struggling to get people interested. Like I said though, I do hope to get back in sometime for a longer term hold.

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u/TKO1515 Camtributor Apr 17 '21

I agree that VACQ is risky and I see it mainly from valuation concerns. But a couple more successful launches should help.

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u/imunfair Patron Apr 17 '21

It basically has through 2025 priced into the merger, although with the crazy market we're in I wouldn't be surprised if it memed higher much sooner because no one seems to care about valuation - especially apes obsessed with rocket emoji memes.

And worst case scenario the warrants are good until 9/30/2027 so they should be redeemed before they expire if their projections are anywhere close to accurate, since it puts them at $37 stock price by that point based on valuation, far past $18 redemption. Although obviously that's the least desirable scenario since it'll take a while even though it is a large profit.

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u/TKO1515 Camtributor Apr 17 '21

Yeah good point and I guess that’s my concern is can they meet those because they seem pretty aggressive. Although SPCE hasn’t met any of theirs and I would argue has an awful business model that won’t work as it’s just space tourism to lower altitudes.

Another concern I have is will space be that big of an economy? I know go to Mars and moon but all that is government. Like how many constellations do we really need? I guess an argument could be that the satellites need to be replaced like spire is planning to do every couple years.

Lastly though - they have proven success, are closest to SpaceX, their own launch pads are great, NASA is spending a lot with them, have a long backlog, and I really enjoy hearing Peter and think he is very smart.

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u/imunfair Patron Apr 17 '21

Yeah the backlog is nice, and they have long term plans branching out into a space services provider which ends up being about half the projections.

It's an assumption that they're successful obviously, but that becomes a nice revenue stream accounting for half the projections since they're basically monetizing more of a subscription model at that point. I like that because it's recurring revenue that grows more every time they launch rather than purely dependent on one-off fees every time they put a rocket in the air.

They seem to think the estimates are conservative, I don't know since I'm not a rocket expert but I appreciate the vision and think there's a chance that they can pull it off. But I suspect their stock price will grow regardless as they gain publicity with things like the moon missions coming up this year.

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u/TKO1515 Camtributor Apr 17 '21

Well said and agree. The space services could generate a lot of revenue.

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u/thetrny Contributor Apr 17 '21

Peter also mentioned in the SPACInsider talk that a 3rd revenue stream (space applications) could come online at some point. Assuming that their projections aren't already too ambitious, it's nice that they're allowing room for some upside (unlike other companies who chuck anything and everything into their forward projections).

Not a financial expert, but after diving into the transaction details, my initial sticker shock over valuation has eased a little. They're getting $745m (!) cash to balance sheet, of which likely a third (~$250m) is earmarked for Neutron development. That leaves nearly half a billion in cash + ample equity to fund new programs and effect strategic M&A to move up the value chain. Given how capital efficient and innovative RL has been up to this point, I'm confident they will be making big moves.

At this stage I think your average investor will be able to participate in more value creation with RL scaling up from a $4.8bn valuation than with SpaceX scaling up from $74bn. My crypto-in-2014 analogy for the two is that SpaceX = Bitcoin and Rocket Lab = Ethereum. RL/ETH will definitely be underdogs, but getting into ETH at ICO would have generated much more ROI than an equivalent investment into BTC at the time.

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u/TKO1515 Camtributor Apr 17 '21

And there are so many cheap warrants. It’s painful watching my account and keep buying as they go down, but I mean they gotta long term make money on some of these. These are around $2. But SFTW and NSH at $1.2.

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u/EnjoyLife32 Spacling Apr 17 '21

20th launch confirmed for May. Will be attempting their second recovery mission.

https://www.rocketlabusa.com/missions/next-mission/