Sticking With This Rocket Lab Price Target After $8 Billion Acquisition News
The small-cap aerospace firm will reportedly add a significant satellite name.
You've reached your free article limit
You've read 0 of 1 free Pro articles.
We’re explaining some recent weakness, at least for portfolio holding Ondas Inc (ONDS).
On Friday, Ondas filed a registration to the offer and sell from time to time by stockholders (not the company, which matters) of up to 3.378 million shares of common stock. As just mentioned, the firm is not selling any shares under this prospectus and will not receive any of the proceeds from any related sales.
The firm stated, “The selling stockholders may sell some, all, or none of the shares offered by this prospectus supplement and the accompanying prospectus from time to time on the Nasdaq Capital Market or any other stock exchange, market, or trading facility on which shares of our common stock are traded or in private transactions.”
Though not something we relish here at the portfolio, we find this favorable to seeing the firm file for a secondary offering. This does not dilute the equity. The shares have come in a long way since briefly peaking at our target price early in June and this filing was likely behind at least some of that pressure. The portfolio is likely to add a few more shares to the existing position, as we did on Friday, while we feel the shares are trading at a significant discount to where we see them.
Acquisition News
On Monday morning, portfolio holding Rocket Lab (RKLB) and Iridium Communications (IRDM) announced they had entered into a definitive agreement under which Rocket Lab will acquire Iridium. Rocket Lab will acquire all outstanding shares of Iridium common stock for $54 per share (closed Friday at $43.52) in a cash and stock transaction. This represents an enterprise value for Iridium of approximately $8 billion. Iridium stockholders, under this deal, will receive $27 in cash and a number of shares of Rocket Lab common stock calculated pursuant to an exchange ratio, which will be subject to a collar, for each share of Iridium common stock outstanding at closing.
The range of the collar will span from $67.50 to $112.50. The transaction is expected to close within a calendar year, subject to the approval of Iridium stockholders and required regulatory approvals. This transaction has already been unanimously approved by the boards of directors of both firms. Iridium operates a global satellite constellation that provides voice and data communications virtually at scale. The firm’s satellites are used for worldwide voice and data communication from handheld satellite phones, satellite messenger devices, and integrated transceivers. Iridium provides satellite airtime services for an unlimited number of U.S. Department of Defense and non-military federal subscribers. They also serve industries like aviation and maritime shipping where operations reach into remote areas void of terrestrial networks. The portfolio views this acquisition as a net positive.
Friday’s Intentions vs Friday’s Actual Trades
Intention: Purchase 10 shares of (EVLV) at or close to the last sale of $5.15
Actual trade: Bought 10 shares of EVLV at $5.18
Intention: Purchase 25 shares of ONDS at or close to the last sale of $7.55
Actual trade: Bought 25 shares of ONDS at $7.79
Intention: Purchase 10 shares of (PL) at or close to the last sale of $26.01
Actual trade: Nothing done
Intention: Purchase 10 shares of (VELO) at or close to the last sale of $17.15
Actual trade: Bought 10 shares of VELO at $16.54
Monday’s Intentions
Purchase another 25 shares of ONDS at $8.25 or better
Purchase 5 shares of (PL) at $28.50 or better
Current Positions
Long 150 shares of (ALTO) at $5.51. Target price: $8. Last sale: $5.25.
Long 70 shares of (EVLV) at $5.8746. Target price: $8.50. Last sale: $5.50.
Long 200 shares of (OCUL) at $8.271. Target price: $11. Last sale: $9.69.
Short one OCUL $11 September 18 call at $1.65. Last sale: $1.60.
Short one OCUL $9 July 17 call at $0.90. Last sale: $1.20.
Long 200 shares of ONDS at $9.2637. Target price: $14. Last sale: $8.16.
Long 30 shares of PL at $30.6067. Target price: $46. Last sale: $28.61.
Long 5 shares of RKLB at $89.162. Target price: $185. Last sale: $94.94.
Long 35 shares of (RXT) at $6.4529. Target price: $9. Last sale: $6.11.
Long 175 shares of (SIDU) at $3.0342. Target price: $6. Last sale: $2.82.
Long 135 shares of (SOFI) at $15.8617. Target price: $24. Last sale: $18.11.
Short one SOFI August 21 $20 call at $1.02. Last sale: $1.10.
Long 20 shares of (SWBI) at $16.125. Target price: $19. Last sale: $15.35.
Long 45 shares of VELO at $13.2602. No target price right now. Last sale: $17.65.
Cash: $1,133.57.
Portfolio Value: $11,075.32, +10.8% from inception on March 24.
At the time of publication, Guilfoyle was long ALTO, EVLV, OCUL, ONDS, PL, RKLB, RXT, SIDU, SOFI, SWBI and VELO.
