Vector Acquisition Corp – Planned a merger with Rocket Lab.

Vector Acquisition Corp (NASDAQ: VACQ) is a Special Purpose Acquisition Company (“SPAC”), focussed on the acquisition of various assets and businesses through a merger or other business combinations.

Investment Highlights - Vector Acquisition Corp – Speculative Buy at USD 13.14

• The Company has the financial support of Vector Capital.
• The Company has announced plans to merge with a space Company named Rocket Lab. Moreover, the Space Application industry is expected to reach USD 1.40 trillion by 2030.
• From a technical standpoint, the Company is trading more than the 20-day simple moving average of USD 10.83, indicating further upside potential in the stock price.

Key Risks

• The Company is largely dependent on a single merger deal.
• The Company lacks transparency, as its historical financial data is not available.

Recent Developments

On 01 March 2021, the Company had unveiled its plans for a merger with Rocket Lab. Furthermore, Rocket Lab is focused on launching small satellites into space. It has launched 97 satellites for government and private companies across 16 missions. The transaction would be expected to be completed by Q2 FY21. Upon completing the merger, the new Company will be publicly listed under the ticker “RKLB”.

Share Price Chart (from 24 November 2020 to 02 March 2021)

(Source: Refinitiv, chart created by Kalkine Group)

Conclusion

The Company would merge with Rocket Lab by Q2 FY21, and the new Company will have around USD 750 million of cash on its balance sheet. Moreover, VACQ has the financial support of a private equity firm, Vector Capital. However, VACQ does not have any operations, and it has not generated any revenues.

On a technical front, the Company is trading more than the 20-day simple moving average of USD 10.83, indicating an upside potential in the stock price. The stock made a 52-week low and high of USD 9.72 and USD 15.15, respectively.

Based on the bright growth prospects of a merged entity, we have given a "Speculative Buy" stance on Vector Acquisition Corp at the closing market price of USD 13.14 (as of 02 March 2021), while we will further update regarding the details of a merger.

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