Great episode with the usual detailed quantitative analysis which is always appreciated. To calculate the extra runway in the scenario where Rakon is acquired, shouldn't we factor in their existing cash reserves and their future cash flows? Rakon seems to be profitable, so Rocket Lab could use the cash flows to fund Neutron's ongoing development costs.
Rakon’s gross is 16, I believe. Some noted that their net is closer to 5. With that said, if they’re acquired by RL, wouldn’t neutrons deficit be a write off, thus allowing the full 16 to be applied toward neutrons development? Sounds like a winner to me.
I just don't see them spending most of their safety net on this. Considering they tried so hard to minimize dilution, I doubt they would want to try another raise in a year or so.
It really has smelt of acquisition since it was announced. Did you factor in the cash on Rakon's balance sheet and their profitability's impact to RL at group level Scott?
Great point. I was originally going to include a section about Rakon's balance sheet, but ultimately cut it out for the sake of brevity. Looking at it now, we could expect an additional $18M to be added to the net liquidity mentioned in the video. This would give Rocket Lab an additional couple months of operation. Thank you for pointing this out!
@benalsop they have 46% gross profit but only 5% net profit...about 7m NZD. Unless Beck and Spice can really improve that net margin somehow it would be negligible...
I think you answered your own question Scott- is this for extending liquidity or a acquisition? It’s kinda both. What better way to test the market’s faith in the company than offer more. The up take was positive. So use the gold to buy an awesome additional business for what is nothing money given the growth potential of Rakon and then go back to the market foe more burn money on the back of Rocket being an even stronger entity. I’ll add an a additional thought if I may. Rakon is still a NZ based business and Peter is very tight with the new National Party government here. If I were a betting man I would suggest this part of a deal with the New Zealand government to honor one of their election promises to build up the tech aspect of our agricultural based economy. If that’s true then might be an idea to have look down the back of the couch for some more coin because this isn’t the last raise we will see in the near future. As always thanks for your work.
RKLB would be aquiring some serious HP in terms of Rakons people. The technology and capabilities when it comes to the long running success of Rakons R&D, RKLB are not just getting access to the components they require but a whole R&D business and the people that have built that success. As with the purchase of the Warkworth facility, these are some of the cleverest kiwis at the forefront of technology. Its as much about the people joining RKLB as it is just the manufacturing of specific components.
I think there is a high probability that rocket lab will purchase Rakon based on the fact that they are world leaders in technology that can be used to build communication satellite's including 6g tech-this would be a smart move....😁
Not sure where the fascination with Rakon started - a rumor wasn't it? A big outlay. At the other end of the scale, how about Space Ops NZ - Antenna hosting - Antenna leasing - LEOP services. I might be a bit biased - they have dish at Warkworth NZ. Rocket Lab has a foothold here with their Sail GP purchase. Nice town Warkworth 🙂
Rskon said they had been in talks last year with a potential buyer & don't know of any companies in NZ other than rocket lab that are in similar industry 🤔
I didn't know that - interesting - very interesting. I initially wondered if Terran Orbital could be in RKL's sights. Not sure if they would bring much to the table for RKL though.
Every other 'long-lead' item that satellites require, Rocket Lab has essentially purchased in an effort to 'own their own supply chain'. (Star Trackers, Reaction Wheels, Solar Panels, etc.) One of the few components that Rocket Lab is still reliant on from third-party, are the crystal oscillators that Rakon specializes in. Hopefully we hear more during earnings later this month 🤞
Seriously the only reason people are thinking rakon is because it’s a New Zealand company and it makes space stuff. @ $1.70 it’s not a good buy, and why would they want a company with divisions in India, France and the UK. It’s NOT going to buy rakon 😂
Great episode with the usual detailed quantitative analysis which is always appreciated. To calculate the extra runway in the scenario where Rakon is acquired, shouldn't we factor in their existing cash reserves and their future cash flows? Rakon seems to be profitable, so Rocket Lab could use the cash flows to fund Neutron's ongoing development costs.
Definitely. If the rumours persist, I will likely end up building a proper model for Rakon 🤔
@@scotto2050yes, please do this.
Rakon’s gross is 16, I believe. Some noted that their net is closer to 5. With that said, if they’re acquired by RL, wouldn’t neutrons deficit be a write off, thus allowing the full 16 to be applied toward neutrons development? Sounds like a winner to me.
I just don't see them spending most of their safety net on this. Considering they tried so hard to minimize dilution, I doubt they would want to try another raise in a year or so.
But is if fair or sensible to calculate the dilluation in absolutes (shares) rather then current market cap / capital raised?
They have done some really good acquisitions in the past so if they do go ahead with this one i have trust in it to play out well.
It really has smelt of acquisition since it was announced. Did you factor in the cash on Rakon's balance sheet and their profitability's impact to RL at group level Scott?
Great point. I was originally going to include a section about Rakon's balance sheet, but ultimately cut it out for the sake of brevity. Looking at it now, we could expect an additional $18M to be added to the net liquidity mentioned in the video. This would give Rocket Lab an additional couple months of operation. Thank you for pointing this out!
Yes but how profitable is this business? In other words does owning it slow the burn rate down, effectively pushing out the runway?
@benalsop they have 46% gross profit but only 5% net profit...about 7m NZD. Unless Beck and Spice can really improve that net margin somehow it would be negligible...
@@wellyouknowthatsyouropinionman Got it. Thank you. Hopefully they could make it a little more lean, but agree that sounds negligible.
I have some Rakon shares ( not many) pondering whether should I buy more or ??
I was considering a
double down on Rocket Lab, then you get Rocket Lab and if merger is true, Rakon thrown in.
@scotto2050 flick some money to my account and I'll grab Rakon for you through my Sharsies account 😂
I think you answered your own question Scott- is this for extending liquidity or a acquisition? It’s kinda both. What better way to test the market’s faith in the company than offer more. The up take was positive. So use the gold to buy an awesome additional business for what is nothing money given the growth potential of Rakon and then go back to the market foe more burn money on the back of Rocket being an even stronger entity.
I’ll add an a additional thought if I may. Rakon is still a NZ based business and Peter is very tight with the new National Party government here. If I were a betting man I would suggest this part of a deal with the New Zealand government to honor one of their election promises to build up the tech aspect of our agricultural based economy. If that’s true then might be an idea to have look down the back of the couch for some more coin because this isn’t the last raise we will see in the near future.
As always thanks for your work.
RKLB would be aquiring some serious HP in terms of Rakons people. The technology and capabilities when it comes to the long running success of Rakons R&D, RKLB are not just getting access to the components they require but a whole R&D business and the people that have built that success. As with the purchase of the Warkworth facility, these are some of the cleverest kiwis at the forefront of technology. Its as much about the people joining RKLB as it is just the manufacturing of specific components.
Rakon last reported EBITDA OF $16.2M, this should help extend RKLB’s runway. 7:45
It’s a wise squirrel that puts aside nuts for winter…..
For a sec there I thought you got a sponsor 😂
I think there is a high probability that rocket lab will purchase Rakon based on the fact that they are world leaders in technology that can be used to build communication satellite's including 6g tech-this would be a smart move....😁
I'm feeling like its cash to speed up engine development.
Not sure where the fascination with Rakon started - a rumor wasn't it? A big outlay. At the other end of the scale, how about Space Ops NZ - Antenna hosting - Antenna leasing - LEOP services. I might be a bit biased - they have dish at Warkworth NZ. Rocket Lab has a foothold here with their Sail GP purchase. Nice town Warkworth 🙂
Rskon said they had been in talks last year with a potential buyer & don't know of any companies in NZ other than rocket lab that are in similar industry 🤔
I didn't know that - interesting - very interesting. I initially wondered if Terran Orbital could be in RKL's sights. Not sure if they would bring much to the table for RKL though.
Hope they don’t use this to acquire a company and keep this in the bank while they are getting Neutron ready
If they buy this company ill be sure to buy stock... after the stock crashes, because investors hate aquisitions and low cash piles and dillution
Why do you think Rakon is a good fit for RKLB? I don't see it.
Every other 'long-lead' item that satellites require, Rocket Lab has essentially purchased in an effort to 'own their own supply chain'. (Star Trackers, Reaction Wheels, Solar Panels, etc.)
One of the few components that Rocket Lab is still reliant on from third-party, are the crystal oscillators that Rakon specializes in.
Hopefully we hear more during earnings later this month 🤞
AM FAN
Seriously the only reason people are thinking rakon is because it’s a New Zealand company and it makes space stuff. @ $1.70 it’s not a good buy, and why would they want a company with divisions in India, France and the UK. It’s NOT going to buy rakon 😂
Id rather see them buy spire