Rocket Lab NASDAQ:RKLB shares fell more than 11.5% on Thursday after Piper Sandler initiated coverage with a Neutral rating, adding to investor concerns over the company's planned acquisition of Iridium Communications and potential shareholder dilution.
Rocket Lab stock traded around $67 during the session after Piper Sandler assigned an $83 price target. The brokerage's outlook comes as investors assess the company's proposed roughly $8 billion cash-and-stock acquisition of Iridium Communications, a deal that would broaden Rocket Lab's presence in satellite communications alongside its launch and spacecraft businesses.
The Rocket Lab transaction includes about $3.6 billion in bridge financing, prompting some investors to focus on funding needs, execution risks and the possibility of additional share issuance. The company has said the acquisition is intended to expand its recurring revenue base and strengthen its position across defense, aviation, maritime and Internet of Things communications.
Rocket Lab has continued to secure government-related work, including its VICTUS HAZE mission for the U.S. Space Force, as it advances development of its Neutron rocket. Even so, Rocket Lab shares remain under pressure as investors weigh the company's long-term growth prospects against financing and integration risks.