With a name like Rocket Lab USA (NASDAQ:RKLB), you might be expecting a high-flier in the making. Instead, the spacecraft manufacturer crashed and burned 18% in Thursday morning’s trading. What propelled such losses? A combination of a new convertible notes offering and a look at preliminary guidance did that job.
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Things started out hopeful, as Rocket Lab USA launched its first Electron mission this year on Wednesday. The 43rd such launch so far, this time, Rocket Lab focused on space junk, launching an Electron rocket to join in the deployment of four Space Situational Awareness satellites in a combined effort with NorthStar Earth & Space and Spire Global (NYSE:SPIR). The satellites will offer tracking for near-Earth objects in a bid to determine orbit and provide information on potential collisions. Not only is this the 43rd launch of an Electron rocket, but it’s also the 176th mission so far for deploying satellites.
And Then, the Fundraising Started
All of this sounds good so far; Rocket Lab is developing a clear history of successful missions, which should make companies think of it when they need something shot into space. But then the word came out about a fundraising plan featuring $275 million of convertible senior notes. The notes in question will be due in 2029 and will be used to repay some old debt and for the ever-popular “general corporate purposes.”
Is Rocket Lab USA a Buy or Sell?
Turning to Wall Street, analysts have a Strong Buy consensus rating on RKLB stock based on six Buys and two Holds assigned in the past three months, as indicated by the graphic below. After a 24.14% loss in its share price over the past year, the average RKLB price target of $7.53 per share implies 90.87% upside potential.
