Rocket Lab to buy Iridium for $8 billion in space industry shake-up

Rocket Lab's $8 billion acquisition of Iridium creates the only vertically integrated space company outside of SpaceX.

Rocket Lab agreed to acquire Iridium Communications for about $8 billion in a cash-and-stock deal, gaining a satellite network with more than 2.5 million subscribers to compete with SpaceX across the full space stack.

"This deal gives Rocket Lab something no other company except SpaceX has — control of the factory, the rocket, the spectrum and the orbital operations," said Suji Desilva, an analyst at Roth Capital who raised his price target on Rocket Lab to $130 from $100.

The transaction, expected to close by mid-2027, adds Iridium's L-band spectrum and 66-satellite constellation to Rocket Lab's launch and spacecraft businesses. Rocket Lab generated $200.4 million in revenue in the first quarter, up 63.5 percent from a year earlier, with a record backlog of $2.2 billion. The company's GAAP gross margin reached a record 38.2 percent, while its non-GAAP operating loss narrowed to $19 million from $35.8 million.

The deal positions Rocket Lab as the only serious rival to SpaceX in the race to dominate the space economy, which Morgan Stanley estimates could generate $1 trillion in annual revenue by 2040. Rocket Lab's forward price-to-sales multiple of 63.6 times — far above the industry average of 1.9 times — reflects investor expectations that vertical integration will unlock higher-margin recurring revenue from Iridium's consumer data network.

A Bet on Recurring Revenue

Rocket Lab has built its business on launch services with its Electron rocket and the upcoming Neutron rocket, plus satellite subsystems sales — capital-intensive operations with thin margins. Iridium brings a different financial profile: a subscription-based business with more than 2.5 million customers across maritime, aviation, government and emergency services. The satellite operator's weather-resilient L-band spectrum provides a communications channel that competitors using higher-frequency bands cannot match during storms or in remote regions.

The deal also gives Rocket Lab a 500-plus partner ecosystem and a consumer-facing brand, expanding its addressable market beyond government and commercial launch contracts. New Street Research analysts, who rate Rocket Lab a buy with a Street-high $150 price target implying 51 percent upside, said the acquisition strengthens the company's competitive standing against SpaceX and Amazon, which are both expanding their space-based businesses.

Wall Street's Verdict

Of the 17 analysts covering Rocket Lab, 13 rate it a strong buy, one a moderate buy and three a hold, according to data compiled by Barchart. The consensus price target of $117.38 represents about 17 percent upside from current levels. Bank of America maintained a buy rating and raised its target to $115 from $105, while Cantor Fitzgerald's Andres Sheppard reiterated an overweight rating.

Rocket Lab shares have gained 44 percent year to date and 182 percent over the past 52 weeks, though the stock has fallen 34 percent from its May high of $151 as investors rotated out of speculative growth names. The company has completed 91 launches to date, including 12 this year, and was recently selected to support the U.S. Department of Defense's Space-Based Interceptor program.

The company expects its loss per share to narrow to $0.29 this year and $0.19 in 2027, according to Wall Street estimates, as the Iridium acquisition begins contributing to earnings. The deal still requires regulatory approvals, with a closing timeline set for mid-2027.

This article is for informational purposes only and does not constitute investment advice.