Rocket Lab stock is in lift-off mode, surging about 20% the company announced Monday it is acquiring Iridium Communications for roughly $8 billion. What grabbed my attention wasn’t just the size of the deal. It’s that the acquiring company rallied this hard on this smaller size deal, which almost never happens. The market is telling this changes the story, especially so closely after the SpaceX IPO. I’ll walk you through why this isn’t the “Starlink killer” headline so many want to write about. I hold a 2% weighting in our Tactical Alpha Growth portfolio and, as I’ll discuss below, I’m looking to add to my position. First, let’s kill the lazy comparison. SpaceX’s Starlink is a broadband business: 25-200 megabits of high-speed internet anywhere on earth, the kind that streams video and runs Zoom calls, beamed over Ka-band to those big flat panel dishes that don’t love heavy rain and storms. It has more than 10 million subscribers. Iridium is a completely different animal. It’s low-bandwidth, mission-critical communication; voice, texts, emergency SOS and machine-to-machine “internet of things “data. It runs on L-band, a lower, weaker frequency with one magic property: the signal punches through clouds, foliage, mountains and the kind of weather that knocks Starlink offline. That’s why Iridium is the standard for maritime distress calls, military tactical comms and expedition teams in the middle of nowhere. These two companies aren’t fighting over the same customer. This is exactly why the deal matters. Rocket Lab is building a vertically integrated space company. It owns the launch capacity, it manufactures the satellites. Once the deal closes next year, it’ll own the actual global network with paying customers who need guaranteed, weather proof, always-on service for customers like government, maritime operators and remote enterprises. In one move, RKLB picks up 2.55 million subscribers and a real recurring revenue stream it didn’t have before. The company was already inflecting, with revenue growing 40%-50% a year with a clear path towards positive EBITDA and net income in 2027, but the number that most encourages me is the $2.2 billion backlog that management cited in the last 10Q. One-third of that backlog should be realized in the next 12 months and other two-thirds beyond that. That’s real visibility into the growth path, and Iridium just bolted recurring revenue on top of it. Think of Rocket Lab as a smaller, public, more leveraged version of the full-stack model SpaceX pioneered, rocket to satellite to operating network, just competing in the assured, weather-proof niches where broadband isn’t the right tool. Now the chart, because this is where I get interested. Refer to the daily log chart below and you’ll see it immediately. Since early 2025, RKLB has pulled back to its rising 200-day moving average four separate times, and I’ve marked each one: -55%, -49%, -44%, and now -47%. Every prior test launched the stock right back to new highs. This latest sell-off dropped it about 47% off the May high into that same 200-day line, now near $75, and the stock is trying to stabilize and turn. That’s the fourth test of a setup that has worked three times in a row. For the record, I first added RKLB at a 1% weight on the November pullback, took it to 2% on this June pullback and, if the stock can stabilize and push back through the old highs, I’ll add another 1%. One more chart worth your time: The second image below overlays Rocket Lab against SpaceX. It’s only a couple of weeks of data, but the two have already started trading as a tight pair. Both sold off into late June, and both are recovering together right where the overlay turns back up. As the only two public, full-stack space names, I think they increasingly move as a group, and the SpaceX IPO has thrown a fresh spotlight on the entire sector. The “Starlink killer” framing misses the point entirely. Rocket Lab didn’t buy a broadband competitor. It bought the missing piece of an integrated space platform. And if the chart keeps rhyming, this fourth 200-day test should look a lot like the first three. -Todd Gordon, Founder of Inside Edge Capital, LLC We offer active portfolio management and financial planning for retail investors, as well as regular market updates like the idea presented above. Visit us at https://www.insideedgecapital.com/cnbc DISCLOSURES: Todd owns RKLB personally and for clients of his wealth management company Inside Edge Capital, LLC. Charts shown are Koyfin) All opinions expressed by the CNBC Pro contributors are solely their opinions and do not reflect the opinions of CNBC, or its parent company or affiliates, and may have been previously disseminated by them on television, radio, internet or another medium. THIS CONTENT IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSTITUTE FINANCIAL, INVESTMENT, TAX OR LEGAL ADVICE OR A RECOMMENDATION TO BUY ANY SECURITY OR OTHER FINANCIAL ASSET. THE CONTENT IS GENERAL IN NATURE AND DOES NOT REFLECT ANY INDIVIDUAL’S UNIQUE PERSONAL CIRCUMSTANCES. THE ABOVE CONTENT MIGHT NOT BE SUITABLE FOR YOUR PARTICULAR CIRCUMSTANCES. BEFORE MAKING ANY FINANCIAL DECISIONS, YOU SHOULD STRONGLY CONSIDER SEEKING ADVICE FROM YOUR OWN FINANCIAL OR INVESTMENT ADVISOR. Click here for the full disclaimer.
This rocket stock is testing a key level once again. Why Todd Gordon thinks it’s a buy
