Stock Takes: Three, two, one… will Rocket Lab achieve listing blast-off?
Kiwis have more than $11 million riding on Rocket Lab becoming a listed company.
The voting of Vector Acquisition shareholders on the merger Rocket Lab is set to be finalised on Friday night US eastern standard time – early hours of Saturday morning New Zealand time.
Close to 4000 users of the Sharesies investment platform have invested just over $5m into Vector Acquistion – a NASDAQ-listed special-purpose acquisition company (SPAC) set up for acquiring Rocket Lab.
While Hatch has 2000 investors and almost $4m and Australian share trading platform Stake says its Kiwi customers have $2m in Vector Acquistion.
Sharesies co-CEO Leighton Roberts said just under half of its users who had shares in Vector Acquisition had voted on the merger and virtually all were in favour of it.
He reckons the chances of the merger going ahead of now pretty high.
“Time is the riskiest thing. For moments like this the futher away it is the more doubts there are, the closer we get the more likely it is to happen. It is looking pretty close now, I would suggest it’s a done deal but you never know until the day. We will find out Saturday.”
Roberts says based on other SPAC deals the ticker code could switch to RKLB from as early as Monday US Eastern standard time, early hours Tuesday morning New Zealand.
“We will pretty much just get a notification that the ticker code changes and that will be it – it will be off.”
Roberts said it would be interesting to see how the market priced the company once the merger is finalised.
“At the moment they are just pricing a big cash pool really.”
Roberts says SPACs in the past year haven’t jumped up as much as initial public offers have.
“IPOs tend to take off and then level out a bit or sometimes go the other way. In Robinhood’s case there was a quick sell-off.
“One thing is for sure demand from New Zealand investors won’t be enough to move the market too much. So it is going to depend on what people in US think and what sort of funds pick it up.”
Hatch co-founder and general manager Kristen Lunman said it had a further 2300 investors who were keen on the stock once the merger has gone ahead.
“There is still some conerns around SPACs being speculative, I think it is a great sign people aren’t investing in what they don’t know even though this one feels relatively straight forward. I think it is a good sign people aren’t jumping into it.
:A lot of people are viewing Rocketlab as a 10plus year investment a very much long term investment – it is space, space is hard and there is going to be a lot of bumps along the way for all of these companies that are looking to dominate our skies.”
Lunman said the share price could go either way. She said key institutions were not able to sell out for around six months and some investors maybe waiting for that as well.
“There is likely to be some instability around that six month mark, so it is possible people will either wait until it is listed or wait until after the lock-up period. It is anyone’s guess as to whether it pops or not.”
But at least one Kiwi Vector Acquisition investor is planning to buy more shares should the merger go ahead.
Rick Mozessohn, who lives on Auckland’s North Shore, already owns 530 shares but says he plans to buy 10 times more post merger.
“I probbably plan on putting in about $100k – I’m going deep. I’m here for 10 years,” Mozessohn who is a real estate agent by day says.
Mozessohn, who describes himself as a fundmental investors said he had been following the company since its inception.
“I love Peter Beck, I have been following the company since the inception, I have some friends that have worked for them. I just generally think it is an awesome industry.”
Mozessohn is convinced the merger will get over the line. “I was a bit concerned when they delayed the merger announcement. Especially when they had that launch failure as well. I probably suspect that might be part of why they delayed.”
But he says he is investing in them because he believes in the long term potential for the company not because of the ups and downs of the day to day running of the business.
If other space companies are anything to go by it could be a volatile ride. Sir Richard Branson’s Virgin Galactic saw its share price hit US$55.91 in June but its now trading around Us$25.25.
Rocket Lab is staying hush on the timing of the ticker code change. The company is due to report its second quarter results on September 8, US eastern standard time.
It hasn’t got a confirmed launch window for its next rocket but a spokeswoman said it was working toward launches in the coming weeks.
Of course the exact timing may depend on when New Zealand gets out of its alert level four lockdown.
The Rocket Lab spokeswoman said it had previously been able to carry out most operations in alert level three.
“We’re currently assessing what the different alert levels will mean for launch activity.”
Last year’s level four lockdown prompted a huge just in trading activity on platforms like Sharesies and Hatch.
Sharesies co-CEO Roberts said activity on the first day of this level four lockdown had been “noticeably bigger” than a normal Wednesday would be as far as deposits coming into the platform.
“We did see a reasonable amount of profit taking in Fisher & Paykel Healthcare and A2 Milk as well – there is a lot of interest there.
“It’s hard to say exactly why but people just start logging in a lot more againjust to see what is happening. Once they are there often people are hunting opportunities to see if there is something that over-reacted a bit.”
New Zealand’s sharemarket dipped on Tuesday after the community Covid case was revealed but before the lockdown was announced but then bounced back on Wednesday.
Shares in A2 Milk have had a volatile weeks after speculation in Australia media that it is in the takeover sights of an overseas buyer.
On Monday the Australian reported that Swiss milk product giant Nestlé has a close eye on the company but industry insiders do not expect any moves to be made on A2 until after it reports its annual result.
The paper said the multinational beverage company Kirin Lion had also taken a shine to A2 in the past, but the price was too high.
Sam Trethewey, portfolio manager at Milford Asset Management said the rumour hadsent the stock up 12pc on Monday and then it fell four or five per cent on Tuesday.
He said the article had limited substance to it.
“It is certainly a possibility for A2 that someone may look to acquire them if they see value in the brand given the material pull-back they have seen in the share price but other than that there was not much to it.”
Trethewy said merger and acquisition activity was occuring quite rapidly throughout the world given the environment of low interest rates, cheap money and depressed share prices in places because of Covid.
“We are seeing that happen and it is happening in Aussie – Sydney airport is a good example.”
A2 is not the only Kiwi company where takeover talk has surface in recent weeks with Z Energy also in the mix.
Trethewey said it was hard to know whether someone was looking at it seriously. “But it is another asset that could be of interest to a party. The A2 result will be the most higly anticipated result of the entire reporting season I expect.”
A2 is reporting next Thursday. Trethewy said any guide on how much the company intended to spend on marketing and rebuilding the brand in the coming year would be of high interes for shareholders.
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