SpaceX who?

You know the old saying: If you can’t beat ’em, build a miniature version of ’em.

That seems to be the idea behind Rocket Lab’s acquisition of satellite services company Iridium Communications. Iridium’s satellite network provides Rocket Lab with a larger low-Earth orbit network of satellites that will allow the newly combined company to offer a broader range of communication services—and make it more competitive with SpaceX.

“By marrying Iridium’s deep heritage, trusted infrastructure, and highly sought-after spectrum with Rocket Lab’s extensive and proven launch and manufacturing capabilities, we have the capability to unlock entirely new markets,” Rocket Lab founder and CEO Sir Peter Beck said in a press release.

Rocket Lab leapt 15.86% today, while Iridium soared 25.44%.

It’s not rocket science

Rocket Lab already has the rockets it needs to launch its own satellites into space, while Iridium will expand the company’s satellite constellation and provide some much-needed wireless spectrum assets. The latter is a finite resource that spacefaring companies are in a battle to control as the market for direct-to-device communications (connecting satellites directly to smartphones and other equipment) continues to grow.

After this deal, Rocket Lab’s business model will more closely resemble SpaceX’s: a vertically integrated company that can build you a satellite and hurl it into space, too. The difference is that SpaceX is a $2 trillion elephant in the room, while Rocket Lab’s market cap remains a measly $60 billion. And SpaceX has a mighty headstart: Its Starlink business arm has about 10,000 satellites in space, while Rocket Lab has launched over 250, and Iridium will provide it with another 66 after this deal.

Still, Rocket Lab’s appeal to investors may be that it’s a smaller, cheaper bet on the space race than its overvalued competitor. The problem is, SpaceX’s public debut means the bigger company is snagging investors’ attention—and soon, it could automatically enter their portfolios.

Speaking of SpaceX

SpaceX began trading on the Russell 1000 and the MSCI’s US indexes today, and Nasdaq announced on Friday that the stock will be fast-tracked for inclusion in the Nasdaq 100 early next month. That means any broad-market funds connected to the Russell, MSCI, or Nasdaq 100—like an index fund or ETF—will automatically buy shares of the stock, pushing billions of dollars in SpaceX’s direction and potentially fueling future gains.

Rocket Lab is making all the right moves to compete with SpaceX, but Elon Musk’s company is dominating headlines and vacuuming up investors’ money—leaving competitors like Rocket Lab scrambling to catch up.—MR