Rocket Lab: Reading The Tea Leaves Of The Convertible Note Offering

Summary:

  • Rocket Lab USA, Inc. announced two related transactions: (i) a convertible note offering worth $300 million, and (ii) the purchase of capped call options to partially or fully offset share dilution.
  • In this article, I take a closer look at these transactions and their potential consequences for Rocket Lab.
  • My analysis suggests that Rocket Lab could see a range of outcomes, some positive, some negative, depending on the purpose for raising money (which we do not currently know).
  • Overall, Rocket Lab USA, Inc. stock remains a strong buy for me.

Small space ships takes off and flys away

mikkelwilliam

Rocket Lab USA, Inc. (NASDAQ:RKLB) announced on Wednesday (January 31) that it would be making two significant and related transactions closing on February 6th: (i) a convertible note offering to raise $275 million (later raised to $300 million); and (ii) a


Analyst’s Disclosure: I/we have a beneficial long position in the shares of RKLB either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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