Rocket Lab (RKLB.US) VS SpaceX (SPCX.US): Spectrum's old grievances have reached the point where the FCC merger review, which space stock has more room to rise?
The Zhitong Finance App learned that Rocket Lab (RKLB.US) plans to buy Iridium Communications (IRDM.US) for about 8 billion US dollars, while SpaceX (SPCX.US) warned during the FCC merger review that this deal would strengthen an opponent that has been competing with it for a long time for spectrum. Wall Street is bullish on both companies, but SpaceX's implied upside is greater.
The controversy focused on whether the deal would weaken competition. Rocket Lab and Iridium Communications stated in a joint statement that the spectrum dispute should be handled separately, and that the deal “will not increase the concentration of any market or reduce competition.”
SpaceX says Iridium Communications has been blocking competition for a long time
SpaceX said in a new document submitted to regulators on Monday that Iridium Communications has long used procedural objections, exclusivity claims and coordination requirements to restrict competitors' network deployments.
According to the company, the “promotion of competition” that Rocket Lab and Iridium Communications are flouting Iridium Communications's own obstruction of competitors over the years. SpaceX satellite policy assistant Matthew Turk said that when considering the deal application, the committee “must consider the real public damage caused by Iridium Communications's years of anti-competitive behavior.”
The conflict between the two sides has a long history. The controversy revolves around the Starlink gateway, a gateway station connecting satellites to terrestrial networks. Iridium Communications said some of the proposed operations would interfere with its links in the shared Ka band.
In January of this year, the FCC approved additional operations under additional interference protection conditions; Iridium Communications objected to a gateway application in Bastrop, Texas in May, and SpaceX fought back in June and July, saying that the FCC had rejected the request 18 times.
In August, Iridium Communications Supervisor Kara Azocar stated that “Iridium Communications has no intention of blocking SpaceX's business plans,” and mentioned that negotiations are progressing. However, five days later, Iridium Communications also said the simulation still showed excessive interference. SpaceX introduced the matter into a merger review on August 27, while making it clear that it “has no objection to the deal.”
Why did Rocket Lab buy Iridium Communications
The deal was announced at the end of last month at a price of $54 per share, comprised of $27 in cash and Rocket Lab shares. Iridium Communications shareholders approved it in September, and the settlement is expected to be completed in 2027, subject to FCC approval and other conditions.
Iridium Communications will bring more than 2.55 million users and 66 satellites in orbit, and merge it into Rocket Lab's launch and manufacturing business. According to the two companies, the transaction can reduce costs and speed up upgrades, including increasing the number of single star beams to 20 times the constellation, a wider range of direct-connected equipment services, and stronger positioning and navigation timing capabilities.
Regarding the impact of competition, the two companies emphasized that Rocket Lab has no mobile satellite service spectrum, and there is no independent path to enter the Iridium Communications market in the short term, so “the deal will not increase concentration or reduce competition.”
Target price and retail sentiment
Sellers gave both companies an overall rating of “strong buy,” but the upside was different. According to Koyfin data, SpaceX's 12-month average target price is 255.06 US dollars, which means there is 78% room for growth compared to the current level. Meanwhile, Rocket Lab's target price is $99.40, implying 59% upside.
The difference lies in distribution. Of the 22 analysts covering Rocket Lab, 5 gave a “strong buy” rating, 13 gave a “buy” rating, and 4 gave a “hold” rating. There was no selling rating. The target price ranged from 58 to 150 dollars. Its stock price increased by about 21% over the past year.
Of the 40 analysts covering SpaceX, 8 gave a “strong buy” rating, 24 gave a “buy” rating, 6 gave a “hold” rating, and 2 gave a “sell” rating. The target price range was 70 to 800 dollars, and the valuation differences were clearly greater.
In addition to the merger review, there are multiple fronts. Ligado raised similar competition concerns in October; Globalstar (GSAT.US) focused on Rocket Lab's role as its supplier and warned that its exposure to design and scheduling could cause a conflict of interest, but the company was not opposed to the deal.
Spectrum expansion progresses simultaneously. On Tuesday, the FCC accepted Starlink Spectrum Holdings to acquire Grain Management's 546 to 800 MHz licenses, covering 3,224 counties and up to 14 MHz. After the deal, SpaceX's spectrum limit in the relevant regions could reach 89 MHz.
In the launch order, both companies included 13 eligible suppliers for NASA's VADR program. Rocket Lab also questioned NASA's award of about 700 million US dollars to Blue Origin for the Mars Communications Network. The GAO will decide on December 21.
Retail investors are too emotional. On Stocktwits, retail sentiments about Rocket Lab changed from “bearish” to “extremely bullish” within a week, and the amount of discussion was “high”; sentiment about SpaceX rose from “neutral” to “bullish,” and the amount of discussion was “normal.”