Plunge

Rocket

<div class="textg" style="text-align: justify; font-weight: lighter; line-height: 1.3em; font-size: 15px; border-radius: 3px; color: #80909a; padding: 10px; background-color: #F4F6F9; margin-bottom: 15px;">
 Neither the author, Tim Fries, nor this website, The Tokenist, provide financial advice. Please consult our&nbsp;<a href="https://tokenist.com/terms-of-service/" style="text-decoration:underline;color:#3c7b7b" target="_blank" rel="noreferrer noopener" class="deco-link">website policy</a>&nbsp;prior to making financial decisions.
</div> 
<p class="has-drop-cap">Rocket Lab (NASDAQ: RKLB) said on Thursday it had <a aria-label="initiated a $275 million priv (opens in a new tab)" href="https://www.businesswire.com/news/home/20240131263297/en/Rocket-Lab-Announces-Proposed-Offering-of-275-Million-Convertible-Senior-Notes" target="_blank" rel="noreferrer noopener nofollow" class="deco-link">initiated a $275 million priv</a><a href="https://www.businesswire.com/news/home/20240131263297/en/Rocket-Lab-Announces-Proposed-Offering-of-275-Million-Convertible-Senior-Notes" class="deco-link" target="_blank" rel="nofollow">ate offering</a> of convertible bonds, sending its stock price tumbling at the opening bell. Simultaneously, the satellite launch service provider <a aria-label="reported (opens in a new tab)" href="https://www.businesswire.com/news/home/20240131503356/en/Rocket-Lab-Announces-Preliminary-Fourth-Quarter-2023-Financial-Results-After-Successful-Launch-for-Spire-and-NorthStar" target="_blank" rel="noreferrer noopener nofollow" class="deco-link">reported</a> preliminary financial results for the fiscal Q4 2023.&nbsp;</p> 
<h3 id="what-has-this-announcement-caused-a-decline-in-rocket-lab-s-shares">What Has This Announcement Caused a Decline in Rocket Lab’s Shares?</h3> 
<p>Rocket Lab’s share price dived nearly 16% at the market open on Thursday after the company announced it had launched a private offering of $275 million 5-year convertible bonds.</p> 
<p>The company intends to allocate roughly $40 million of the net proceeds to settle debts from an equipment financing agreement. The rest will be used for working capital and general corporate purposes, including potential acquisitions.</p> 
<p>The satellite launch firm said the senior notes, set to mature on February 1, 2029, will accrue interest to be paid every six months. Furthermore, Rocket Lab plans to offer the initial buyers of these notes the option to acquire additional notes up to $41.25 million in principal amount. This option can be exercised within 13 days starting from the issuance date of the original notes.</p> 
<p>The sharp drop in <a href="https://tokenist.com/is-rocket-lab-a-solid-growth-stock-play-for-2024/" rel="dofollow" class="deco-link">Rocket Lab’s stock</a> on the announcement should be no surprise, given the historical effect convertible note offerings had on stocks. Notably, these deals typically shift the convertible bond investor base from long-only investors towards convertible arbitrage funds. Such funds buy the convertible notes and simultaneously short-sell the underlying stock, exerting significant downward pressure.&nbsp;</p> 
<div class="cta-referral"> 
 <img src="https://tokenist.com/wp-content/themes/thetokenist/assets/img/del/cta-referral-1.png" alt="" class="cta-referral__img" loading="lazy" decoding="async"> 
 <div class="cta-referral__text"> 
  <p>Join our&nbsp;<a href="https://t.me/thetokenist" target="_blank" rel="noreferrer noopener nofollow" class="deco-link">Telegram group&nbsp;and never miss a breaking story.</a></p> 
 </div> 
</div> 
<h3 id="rocket-lab-s-releases-preliminary-q4-2023-results">Rocket Lab’s Releases Preliminary Q4 2023 Results</h3> 
<p>Rocket Lab announced a convertible bond offering on the same day it unveiled its preliminary financial results for the fiscal fourth quarter.&nbsp;</p> 
<p>According to the unaudited report for the quarter ended Dec. 31, Rocket Lab’s Q4 revenue is projected to range from $59.0 million to $61.0 million, marking an increase from the $51.8 million recorded in the same quarter last year. Specifically, its Space Systems segment experienced revenue growth, with estimates ranging between $50.5 million and $52.5 million, up from $39.7 million in Q4 of the previous year.&nbsp;</p> 
<p>However, the revenue from its Launch Services is anticipated to be around $8.5 million, a decrease from the $12.0 million reported in the same period the year before.</p> 
<p>The non-GAAP gross margin is forecasted to be in the range of 31.4% to 33.2%. Moreover, the company projects a net loss of $49 million to $52.5 million and an adjusted EBITDA loss between $28 million and $30 million.&nbsp;</p> 
<p>In December, the <a href="https://tokenist.com/rklb-publically-traded-spacex-competitor-at-a-steep-discount/" rel="dofollow" class="deco-link">SpaceX rival</a> Rocket Lab <a href="https://tokenist.com/rocket-lab-stock-up-17-3-after-515m-agreement-with-us-gov/" rel="dofollow" class="deco-link">won a $515 million contract</a> with a government customer to design, manufacture, deliver, and operate 18 space vehicles.</p> <iframe src="https://tokenist.substack.com/embed" width="100%" height="320" style="border:1px solid #EEE; background:white;" frameborder="0" scrolling="no"></iframe> 
<p><em><strong>Do you think Rocket Lab will be able to compete with SpaceX in the future? Let us know in the comments below.&nbsp;</strong></em></p> 
<p><em>Disclaimer: The author does not hold or have a position in any securities discussed in the article.</em></p> 
<p>The post <a rel="nofollow" href="https://tokenist.com/rocket-lab-rklb-shares-plunge-16-after-275m-convertible-notes-proposal/">Rocket Lab (RKLB) Shares Plunge 16% After $275M Convertible Notes Proposal</a> appeared first on <a rel="nofollow" href="https://tokenist.com">Tokenist</a>.</p>

Rocket Lab (RKLB) Shares Plunge 16% After $275M Convertible Notes Proposal

Table of Contents

Tokenist

Other articles published on Feb 1, 2024

USDT leads the way as stablecoin inflows cross $400M

El Salvador to Continue Using Bitcoin as Legal Tender During President Bukele’s Second Term

Celsius distributes $3 billion to creditors via PayPal and Coinbase

Floki and Chainlink struggling, Meme Moguls presale approaches $2m

Velar secures $3.5m to develop world’s first PerpDEX on Bitcoin

XRP First Death Cross in 2024 Arrives; Here's Price Implication

Join our free newsletter for daily crypto updates!