Talk around Rocket Lab this summer keeps circling back to one idea: that the company is becoming the next SpaceX.
It is an easy comparison to make and a hard one to justify. SpaceX is now a nearly $2 trillion public company after its record-breaking initial public offering in June, while Rocket Lab is worth a little under $50 billion.
But the comparison has moved beyond retail chatter and into bank research. Morgan Stanley is now putting an actual number on how much of that SpaceX story Rocket Lab could capture, and the figure has jumped sharply in just a few weeks.
The trigger was Rocket Lab’s agreement to buy Iridium Communications, (IRDM) a satellite communications company, in an all-stock-and-cash deal worth about $8 billion, according to Rocket Lab’s own announcement.
Wall Street read the move as a direct attempt to close the gap with SpaceX’s Starlink business, according to a Bloomberg report on the transaction.
That reading is now showing up in valuation math. Morgan Stanley raised its bull case for Rocket Lab (RKLB) to $293 per share from $185, a 58% jump, according to Morgan Stanley notes shared with TheStreet.
The firm’s base case price target stayed at $105, but the widening gap between the two numbers is the real story here.
Why the SpaceX comparison keeps coming up
Rocket Lab’s core argument for the comparison has always been operational, not financial. Its Electron rocket is the second-most-used launch vehicle in the United States and third-most-used in the world, trailing only SpaceX and China’s state launch programs, according to the Morgan Stanley notes.
That track record matters because it gives Rocket Lab something rare in the space industry: proof it can launch reliably and often.
The company is also building a larger rocket called Neutron, aimed at lowering the cost of getting heavier payloads into orbit. It’s a strategy that mirrors how SpaceX used Falcon 9 to undercut competitors on price.
Until now, though, Rocket Lab’s business stopped at launch and satellite manufacturing. It never had its own constellation generating recurring revenue the way Starlink does for SpaceX. That gap is exactly what the Iridium deal is meant to close.
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What the Iridium deal actually buys Rocket Lab
Iridium already operates a functioning satellite network with more than 2.5 million active subscribers and its own coordinated spectrum rights, according to Rocket Lab’s deal announcement.
Buying that network is faster and cheaper than building one from scratch, which typically takes years and billions of dollars before it produces a dollar of revenue.
More Rocket Lab:
- Why Rocket Lab stock tumbled on Nasdaq-100 news
- Rocket Lab doubles down on satellite network with $8B acquisition
- Rocket Lab’s $8B Iridium deal opens new satellite-phone test
Rocket Lab CEO Peter Beck called the acquisition the “logical next step” for a company that already had launch and manufacturing but was missing a customer-facing application layer, according to a SpaceNews interview.
Investors responded immediately. Rocket Lab shares jumped roughly 16% the day the deal was announced, according to a report from Reuters.
Iridium’s business is also already profitable, with an EBITDA margin near 55%, according to the Morgan Stanley note. That is unusual in a sector where most companies, Rocket Lab included, are still losing money.
Rocket Lab still isn’t SpaceX, and Morgan Stanley knows it
Morgan Stanley is careful to draw a line here. The firm’s math assumes Rocket Lab could eventually capture around 10% of the value it assigns to a comparable slice of SpaceX’s launch and connectivity businesses, not anything close to parity, according to the Morgan Stanley notes shared with TheStreet.
The firm also flags that Iridium’s network and Starlink solve different problems. Iridium specializes in low-bandwidth, mission-critical connectivity for governments, aviation, and maritime customers, while Starlink is built for high-capacity broadband, according to the Morgan Stanley notes. Rocket Lab is not about to compete with Starlink for home internet customers.
Related: Rocket Lab’s $8B Iridium deal opens new satellite-phone test
That distinction is part of why Morgan Stanley left its base-case price target untouched at $105 even while lifting its bull case.
Rocket Lab shares closed at $83.41 on Tuesday, July 7, still well below its 52-week high of $151, meaning the stock trades with a wide spread between where it sits today and where the most optimistic outcome could take it.
The bigger pattern in the space industry
What is happening at Rocket Lab reflects a broader shift now that SpaceX trades on public markets with a visible, minute-by-minute valuation attached to its business model.
Rivals no longer have to guess how much a launch-plus-connectivity strategy might be worth. They can watch it get priced in real time and try to replicate pieces of it before someone else does.
That is likely why Amazon has moved to acquire Globalstar and why SpaceX itself has pursued spectrum from EchoStar, according to the Morgan Stanley notes.
Consolidation in satellite connectivity is accelerating, and the players left without a network of their own may find themselves running out of assets to buy.
Related: Rocket Lab doubles down on satellite network with $8B acquisition