Rocket Lab bets $8 billion on Iridium to become a cash-flow space company

Rocket Lab (Nasdaq: RKLB) has completed the acquisition of Iridium Communications (Nasdaq: IRDM) at the price of $54 per share in a cash-and-stock deal valuing the satellite leader at $8 billion. The purchase transaction will add a powerful subscription-based network to Rocket Lab, a company known for its spacecraft manufacturing and launch services.

From the perspective of investors, the transaction makes perfect sense. Rocket Lab is a rapidly growing company that still consumes cash. Iridium, on the other hand, operates a well-established network based on consistent revenues and strong operational EBITDA. This acquisition suggests that Rocket Lab will grow into a more vertically-integrated space company with stable cash flows.

Buying a cash engine instead of building one

Rocket Lab announced that it achieved record revenue of $234 million for its second fiscal quarter, an increase of 62% compared to last year, while its backlog reached a record high of $2.36 billion, a 137% increase year-on-year. However, Rocket Lab continues to spend heavily on the development of Neutron, its reusable medium-lift rocket. The company now expects hardware for first flight to reach the launch pad in the fourth quarter of 2026, rather than committing to an actual launch date.

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