Rocket Lab acquires Iridium Communications in $8 billion deal, challenging SpaceX Starlink dominance

David Jagielski, CPA, The Motley Fool Published: July 7, 2026 at 10:44 AM PDT | 3 min read

Tickers: RKLB | SPCX | NVDA | IRDM

Space Exploration Technologies (NASDAQ: SPCX), commonly known as SpaceX, went public last month. While the company's overall business remains unprofitable, its connectivity and internet segment—anchored by the Starlink subsidiary—has been a strong performer, providing satellite internet services.

However, competition in this space may be intensifying, particularly following a major acquisition announcement from fellow rocket company Rocket Lab (NASDAQ: RKLB). This development could pose significant challenges for SpaceX stock.

Rocket Lab to Acquire Iridium Communications

Last month, Rocket Lab announced plans to acquire Iridium Communications in a cash-and-stock transaction valued at $8 billion, describing it as a "historical deal" for the business.

The acquisition will create a vertically integrated company, combining:

• Rocket Lab's launch capabilities and satellite manufacturing operations
• Iridium's satellite communications network

Rocket Lab stated the combined entity will be a "space powerhouse primed for growth." The deal is expected to close by mid-2027.

This strategy mirrors SpaceX's own approach and could intensify competition for Starlink, currently SpaceX's primary revenue driver. Rocket Lab is not the only potential threat—tech giant Amazon is also preparing to launch Project Kuiper, its own satellite internet service, in the near future.

Is SpaceX Stock in Trouble?

While SpaceX's connectivity segment may not attract the same investor enthusiasm as artificial intelligence (AI) or space exploration, it is currently the engine of the company's business.

Key financial highlights from Q1 2026:

• Total revenue: $4.7 billion
• Connectivity segment share: Nearly 70% of total revenue
• Connectivity segment operating profit: Just under $1.2 billion (the only profitable segment)

Increased competition could slow Starlink's growth, creating greater risks for SpaceX. The company is already unprofitable and burning through billions in cash. A slowdown in Starlink's performance may require even larger cash infusions to sustain investments in AI and space initiatives.

SpaceX stock is already considered risky due to its inflated valuation. With more competitors potentially challenging Starlink, the company may face increased pressure to prove its long-term viability. Investor sentiment appears cautious—the stock is currently trading near its initial public offering price and could be vulnerable to further declines.

Editor's note: This is a stock to approach with caution.

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This article originally appeared on The Motley Fool.