Rocket Lab (NASDAQ:RKLB) saw its stock price tumble 8.7% on Friday, closing at $63.91 and falling below the critical $67.50 threshold tied to its planned $8 billion acquisition of Iridium Communications (NASDAQ:IRDM). The Nasdaq Composite also declined, shedding 0.6% to 24,975.82. This marks a significant moment for the deal, as the closing price now sits under the lower collar of the exchange ratio mechanism.
The $67.50 floor is a key provision in the merger agreement. When Rocket Lab's stock trades at or below this level, the exchange ratio locks at 0.4000 Rocket Lab shares for each Iridium share, with Iridium shareholders also receiving $27 in cash. Based on Friday's close, the deal is valued at $52.56 per Iridium share, while Iridium itself closed at $45.78, a 12.9% discount. The final transaction value will be determined by a 10-day volume-weighted average price near the end of the period.
The broader satellite and space sector also faced headwinds. AST SpaceMobile (NASDAQ:ASTS) declined 5.0% to $56.20, Intuitive Machines (NASDAQ:LUNR) dropped 5.7% to $12.92, and Redwire (NYSE:RDW) slipped 6.5% to $8.69. Rocket Lab's decline was nearly three percentage points steeper than its smaller publicly listed peers.
Trading volume for Rocket Lab was relatively subdued, with 18.96 million shares changing hands, representing 72% of the 65-day average. The stock has now fallen 2.8% over the past five sessions and a staggering 34.8% over the past month. This monthly decline has wiped out approximately $20.4 billion in market value, roughly 2.5 times the $8 billion enterprise value Iridium is targeting.
The acquisition is expected to bring in additional revenue from recurring satellite services. In 2025, Iridium reported revenue of $871.7 million and company-defined OEBITDA of $495 million, representing a 57% margin. Rocket Lab has secured $3.6 billion in bridge-loan commitments to fund the cash portion of the deal, with the transaction expected to close in mid-2027, subject to shareholder and regulatory approvals.
According to Micah Walter Range, head of consulting firm Caelus Partners, Iridium's network of clients and channels could prove "even more valuable" than its physical assets and spectrum. Rocket Lab continues to post rapid growth in its core business, though it remains unprofitable on an adjusted EBITDA basis. First-quarter revenue climbed 63.5% to $200.3 million, with a backlog of $2.2 billion.
Looking ahead, Rocket Lab projects second-quarter revenue between $225 million and $240 million, with an adjusted EBITDA loss of $20 million to $26 million. Earnings are scheduled for release after the market close on August 10. The Federal Reserve's meeting on July 28-29 could also influence appetite for high-volatility growth stocks, following the Nasdaq's 2.1% weekly decline.
Risks remain significant. The Iridium acquisition is subject to regulatory approvals and substantial funding requirements. Rocket Lab must also manage integration expenses, ongoing adjusted losses, and operational risks related to the Neutron rocket's scheduled launch in 2026. The $67.50 collar serves as a benchmark, not the definitive transaction price; if the final 10-day average falls below this level, every $1 decrease in Rocket Lab's share price would reduce Iridium's stock portion by 40 cents.
