This isn't new news of course, everybody knows this, but we've yet to see it truly reflected in the stock, which remains in the $11 zip code. We think that once VACQ / Rocket Lab completes, the high profile nature of the company and its backers is likely to appeal to institutions, and we think that demand pressure on the stock can lift it. One effect of the SEC's attention on SPAC warrant accounting was to restrain professional investor enthusiasm for the SPAC cohort - that's one reason why pre-merger SPACs are all trading in such tight zones right now, tethered to the notional $10/share "cash value in the trust account" number that most adopt at creation. But what a completed merger is likely to deliver is more institutional interest in holding the name. That the merger date is likely near and does not change the nature of the investment. Rocket Lab / VACQ has seen few challenges - as we allude to above, the company did have to restate its accounts following the SEC's decision that SPAC warrants could not be classified as simple equity instruments, but since most all SPACs in this cohort were similarly affected, that does not seem to have knocked the story off course.Īll SPAC deals we have covered in recent years are the essence of speculation and this is no different. The merger may yet happen and it may well be a big success, but it has not been easy thus far. not least security clearance issues and then, recently, a big valuation haircut. ( SRAC) hit a few potholes in its planned acquisition of Momentus Space, Inc. We've seen, for instance, Stable Road Acquisition Corp. Now, the rider here is that you never really know ahead of time when these SPAC mergers actually complete, but you can usually get a sense of whether there are any major bumps in the road. So we think now is a good time to buy a new position, or add to existing holdings, in VACQ, because risk has fallen and price has barely risen. The merger completion is likely drawing near, which means the risk level of owning VACQ is likely falling, but the market has not yet moved the stock up in response, in our view.
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