I invested in the Vector Acquisitions SPAC after the announced deal with Rocket Lab. The cash I put in represents "real money" for me, but would not materially impact my net worth if Rocket Lab goes bankrupt.
In the near term, a coming supply glut makes me pessimistic about the launch industry. But on a 10 to 20 year time frame, I am optimistic about both the industry and Rocket Lab finding a lucrative place in it.
Below I listed perceived pros and cons for my investment choice. I characterize the investment as high risk, with a nontrivial chance of the value going to zero. Also, you would be unwise to take investment advice from random people on the internet.
Vector Acquisition trades under the ticker VACQ. Once the deal completes this will be changed to RKLB.
- Rocket Lab has successfully completed a slew of launches for paying customers. In contrast, many competitors are still aspirational and have yet to reach orbit.
- Rocket Lab is diversifying its income streams by in-house manufacturing of aerospace parts and selling its turnkey smallsat bus (Photon).
- Rocket Lab has actually done the hard work of making its Electron rocket recoverable. Excepting SpaceX, most competitors are still aspirational on this front.
- Rocket Lab's planned medium lift Neutron rocket expands the number of contracts it can compete for and may help the company survive a coming glut in launch capacity.
- If Starlink is a runaway success, having a reusable Neutron rocket would put Rocket Labs in a position to put up a similar product. (Or be acquired by somebody who wishes to do so).
- China's successful space program may trigger a new space race, leading to significantly more launch demand from the USA.
- Rocket Lab's investor slide deck lacks detailed financials. Instead, "buy" decisions must be predicated on the overall market opportunity and a belief that Rocket Labs will capture a significant stake.
- Launching rockets is difficult, expensive, and not a clear winner compared to other investment opportunities.
- SpaceX's Falcon 9 cadence and rideshare opportunities weaken the value proposition of the Electron rocket.
- With many new entrants, the smallsat launch market is becoming very crowded. A severe oversupply of capacity and an industry shakeout is likely in the near term.
- Rocket Lab has a very ambitious timeline for its medium lift Neutron rocket. A key unknown is what engines will be used and their development state. (SpaceX started Raptor development years before the current frenetic Starship development at Boca Chica).
- If Starlink fails, demand from mega constellations may never materialize. This would weaken the case for the Neutron medium lift rocket.
- As Arianespace continues to fall further behind competitively, the EU may mandate the use of domestic launch providers in order to maintain jobs and national security capabilities.
- China is investing heavily in both its state and semi-private launch providers. Besides competitive pressure, increasing political tensions may split the commercial launch market with China-aligned countries eschewing western launch providers.