u/Secret_Swordfish4121

I was checking out Rocket Lab (RKLB) as it seems to be trying to be a competitor to SpaceX which currently has a crazy $2.1T valuation, and this week they announced they're buying Iridium for ~$8B. They're also up 25% btw (The stock is quite volatile)!

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TL;DR

• Rocket Lab agreed to buy Iridium (the satellite-phone / IoT network) for ~$8B, in cash and stock.
• Iridium did ~$872M of revenue and ~$495M of EBITDA in 2025. It's profitable, while Rocket Lab isn't.
• That's a bigger top line than Rocket Lab makes itself, bought by a company trading at ~85x its own sales (~$58B market cap at ~$100/share market close end of this week)
• Is Rocket Lab taking a smart shortcut to a real constellation, or expensive debt that's going to hurt them in the future?

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First of all, what does Iridium do/sell? They're a low-Earth-orbit (LEO) satellite network plus globally licensed L-band spectrum, serving ~2.5M paying subscribers across defense, aviation, maritime, and the satellite SOS feature in your phone. It's unglamorous (speed capped at 704Kbps & 4-5% YoY revenue growth), it's real (full network already built + active user base + $872M in revenue), and it throws off cash ($495M in operational EBITDA with a margin of 57% and low maintenance cost on existing infrastructure). Essentially, they're quite the opposite to Rocket Lab's profile! Rocket Lab's revenue is growing at 38% YoY, kind of in a hyper-growth moment. They have heavy operational deficit at -$185M operational EBITDA with a margin of -31%, and they are spending millions building out their upcoming medium-lift Neutron rocket, upgrading manufacturing plants, and qualifying engine structures.

Rocket Lab's whole pitch is shifting to become this end-to-end space company that builds, launches, and operates its own constellations, the SpaceX/Starlink model basically. Until last week the "operates a constellation" part was a story riding entirely on Neutron (which failed a qualification testing of the first stage tank in Jan 2026). Buying Iridium hands them an operating constellation, the spectrum, and recurring revenue right now. They skip years of building one from scratch.

What concerns me is a loss-making company is paying ~$8B (half in stock, partly funded by a multi-billion-dollar bridge loan) for it. And the piece that's supposed to make owning a constellation cheap, Neutron, still hasn't flown. From their own 10-K in February:

>"An unanticipated failure during qualification testing of the first stage tank occurred in January 2026 and this has impacted the expected timing of Neutron's first launch... Neutron's first launch is now targeted for Q4 2026."

The real question is, did Rocket Lab just buy a massive financial safety net, or did they just pin down a hyper-growth stock with a mountain of debt? And for anyone who actually works in satcom, is Iridium's L-band network a strategic asset worth ~$8B to a launch company, or a mature business near its ceiling?

I feel like Rocket Lab is buying Iridium because Iridium is everything Rocket Lab is not at the moment. Rocket Lab has the shiny, high-growth launch technology but lacks consistent cash. Iridium lacks shiny growth but owns a dominant, hyper-profitable orbital monopoly. Merging both of these businesses might be a brilliant valuation arbitrage (using Rocket Lab’s inflated stock to buy real cash flow), but it hinges entirely on whether they can outrun this massive new debt load before Neutron ever leaves the pad.

If anyone is interested in digging deeper, I wrote a full analysis here.

For a couple of weeks I've been analyzing & reading Reddit stock filings due to the noise from everywhere and honestly here are my 2 cents.

TL;DR

Reddit's Q1 2026 was objectively strong: revenue grew 69% YoY, operating margin reached 27.6%, and EPS jumped to $1.01. The key driver wasn't user growth (+17%) but monetization, with ARPU rising 44% YoY.

The bull case: Reddit is proving it can monetize its user base far better than expected, international users are growing quickly, and profitability has inflected.

The bear case: User growth is steadily decelerating, ~94% of revenue still comes from advertising, much of its traffic depends on Google search, and the highly discussed AI licensing business is still only ~6% of revenue.

At ~$35B market cap (~14x TTM sales, ~50x TTM earnings), the debate isn't whether Reddit is a good business anymore, it's whether future growth is strong enough to justify today's valuation.

Personally I think the investment case depends much more on continued ARPU expansion than AI licensing for now. The core advertising business is what justifies the valuation. I'll keep tabs on future updates on the direction of AI licensing as it presents an interesting but speculative upside option.

Profitability inflected

Q1 2026 vs Q1 2025:

• Total revenue $663,411K, up 69% YoY
• Income from operations $182,912K, a 27.57% operating margin, up from near breakeven ($3,903K) a year ago
• Net income $203,981K; diluted EPS $1.01 (vs $0.13)

One honest flag: net income ($203,981K) is higher than operating income ($182,912K) because of $22,816K of other income, which the MD&A says "consists primarily of interest income" on their post-IPO cash, plus an unusually low tax bill of just $1,747K (~0.85% effective rate). The cleaner profitability read is the 27.57% operating margin, not the headline EPS.

What's driving it: monetization, not users

• DAUq (Daily Active Uniques) 126.8 million, +17% YoY, but the growth rate is unfortunately decelerating hard. Last 8 quarters of YoY DAUq growth: 51% → 47% → 39% → 31% → 21% → 19% → 19% → 17%.
• ARPU (Average Revenue Per User) $5.23, +44% YoY, this is the real engine. They're earning far more per user, not just adding users.
• Still ~94% advertising ($624,670K of $663,411K). International is the runway: rest-of-world weekly users +33% vs US +10%, but those users monetize at a fraction of US ARPU.

The biggest structural risk is Google!

A large share of Reddit's users are logged-out visitors who arrive from search, and the 10-Q is blunt about it (Item 1A, Risk Factors):

>"We rely, in part, on internet search engines, such as Google, to generate traffic to our website, primarily through free or organic searches."

>"Changes in internet search engine algorithms and dynamics could have a negative impact on traffic for our website."

The MD&A adds that "visitors that come to Reddit from search engines are generally not logged in" (this was also my case until recently lol), so the faster-growing, Google-fed cohort is also the lower-monetizing one, and it's at the mercy of Google's ranking changes. There's a second-order AI threat too. The filing warns users may use AI tools "instead of visiting Reddit directly." So Google is simultaneously Reddit's biggest traffic source, a cloud vendor, a data-licensing customer, and (via AI Overviews) a substitution threat. This is what scares me the most tbh.

The AI data-licensing angle is real, but small and unproven

Everyone's excited about Reddit licensing its human conversation corpus for AI training. The actual numbers (10-Q notes):

• "Other revenue" (mostly content licensing) was $38,741K in Q1, up just 15% YoY vs advertising +74%. So it's ~6% of revenue and growing slower than the rest.
• Contracted licensing backlog (remaining performance obligations >1yr) = $120.6M, of which they expect to recognize $91.6M in the rest of 2026 and only $29.0M in 2027. Front-loaded and running off fast, not a multi-year annuity yet.
• Management's own words: "We are in the early stages of our content licensing efforts... There is no assurance that we will be able to sustain revenues from these efforts."

The interesting kicker is enforcement, Reddit says it has "commenced litigation" against firms that "constructed very large commercial language models using Reddit content without entering into a license agreement." High-value scarce data, but monetizing it should be considered as a medium risk, unpredictable "bonus" if we may say.

Where the big money actually moved (13F filings, positions as of March 31, 2026)

This part is usually my favorite part to inspect. Among the largest managers that file 13Fs, we see different behaviors between long term / short term investors:

• Accumulating: Vanguard added every quarter since its 2024 IPO (eight straight!) (1.67M → 13.79M shares). BlackRock grew from 4.87M → 7.66M shares (~+57%). Baillie Gifford, a long-horizon growth shop built a brand-new ~7.31M-share position from almost nothing in early 2025.
• Heading for the exit: Fidelity, once the single largest holder at ~13M shares, cut it to 2.92M, down ~78% over two quarters. Coatue more than halved (6.53M → 2.79M). D.E. Shaw drifted lower.

So it's real long-only index/growth money adding while several active funds bail, not a one-way tape. (13Fs only capture large institutional filers and reflect March 31 positions, so this isn't every owner or fully current, but the direction of the biggest ones is informative.)

Valuation

At ~$174.96 (June 18 close), market cap is roughly $35.3B (≈202M diluted shares). On a trailing-twelve-month (TTM) basis through Q1 2026 (Q2 2025 + Q3 2025 + Q4 2025 + Q1 2026): revenue $2,473,556K, net income $707,544K, diluted EPS $3.50.

• P/E (TTM) ≈ 50x ($174.96 ÷ $3.50)
• P/S (TTM) ≈ 14.3x ($35.3B ÷ $2.47B revenue)

(Note: this TTM figure differs from full-year 2025 revenue of $2,202,506K, TTM rolls in the strong Q1 2026 and drops the much smaller Q1 2025, a +$271M swing.) These are rich multiples, but they compress fast if the ~50–70% revenue growth holds, so forward multiples are materially lower than trailing. The whole bull/bear argument lives in whether that growth durability justifies paying ~14x sales today.)

Figures from the 10-Q filed May 1, 2026; ownership from 13F filings as of March 31, 2026.

Disclaimer: This is an analysis of the SEC filings for educational and discussion purposes only. This is not financial advice. Do your own due diligence (DD).

Full analysis here!