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Yahoo
06-06-2025
- Business
- Yahoo
Big Dreams, Bigger Risks: Rocket Lab's Neutron Bet Faces Market Gravity
Shares of Rocket Lab (NASDAQ:RKLB) rallied immensely after the first-half decline in 2024, supported by both the business surrounding the neutron mission and contracts with governments. The stock is now 544% up over past 52-weeks. Earlier in the month, the space company reported strong Q1 findings, highlighted main achievement points and confirmed the company's key strategies. However, the company's share price dropped about 12% after it issued soft guidance and the earnings release. I think many ignore how strong Neutron will be in 2025, so I see this as knee-jerk selling. Neutron, a cheaper and reusable rocket, gives Rocket Lab an edge over SpaceX and has already helped the firm begin supplying services to government agencies. For instance, the U.S. Space Force picked Northrop Grumman to participate in the $5.6 billion third phase of its National Security Space Launch program, having selected only five companies. It also won contracts for its HASTE hypersonic vehicle in the U.S. and U.K. programs worth tens of billions. Besides moving into other segments, the company revealed it will buy Mynaric (a laser-communication provider) and develop more advanced satellites, showing their focus on growing in space infrastructure. In addition, Rocket Lab is growing much more quickly than SpaceX, launching nearly 60% more in 2024 than in 2023, which gives it an edge in the space market. Rocket Lab is teaming up with the U.S. Air Force to build its new Neutron rocket, which could transform Rocket Lab and the whole space industry. Neutron is 43 meters high, its diameter is 7 meters, and it is capable of transporting 13,000 kg to low-Earth orbit. The Archimedes engines allow it to lift off by creating 480,000 kg of thrust. I am especially amazed by how much the spacecraft is expected to cost when it launches, at $5055 million. In comparison, SpaceX's Falcon 9 costs around $67 million for every launch and it can accommodate 22,800 kg, set at about $3,000 per kilogram. Neutron is cheaper for each launch, but it costs about $4,000$4,300 per kilogram, so it is less cost-effective. Even so, Neutron has some additional strengths. It is suitable for frequent medium-lift missions such as those needed for the Kuiper satellite constellation operated by Amazon (AMZN). Having a reusable rocket and built-in fairings means the process can be performed faster, saving money. Although Falcon 9 is built for many missions, Neutron concentrates on getting to orbit as quickly as possible and reliably. Being able to make most of their own parts at Rocket Lab helps control their budget and maintain a high standard of quality. Because it has launch sites in the U.S. and New Zealand, the company is able to provide more options for when customers can book a launch. Usually, the cost plays a big role in deciding when to launch, and Neutron's more affordable price might appeal to many users. I also like that it can be used again, which should boost Rocket Lab's earnings as it improves how to collect them. Being picked for the NSSL list on a $5.6 billion indefinite delivery, indefinite quantity (IDIQ) contract until 2029 from the U.S. Space Force is a strong vote of confidence in Neutron's abilities. When the launch starts next year, I expect investor interest to rise. If Rocket Lab successfully scales Neutron launches, it could generate about $787.5 million in annual revenue by flying 15 rockets a year at an average $52.5 million per launch (15 $52.5 million = $787.5 million). Assuming a conservative 5 % net margin, roughly in line with established aerospace peers like Northrop Grumman, each launch would contribute about $2.625 million in profit (5 % $52.5 million). At that pace, total owner earnings could reach approximately $39.4 million annually (15 launches $2.625 million). While Neutron's reusable design and in-house manufacturing could improve margins over time, this 5 % baseline provides a realistic near-term projection grounded in industry comparables. Moreover, the global commercial launch services market is expected to be worth around $12 billion to $15 billion by 2027, with the mid-lift segment (515 t payload) alone accounting for roughly $4 billion. Neutron targets that mid-lift bracket, giving Rocket Lab access to potentially $400 million$800 million per year from mega-constellation projects (e.g., Amazon Kuiper) plus U.S. government and other mid-satellite contracts. While the Neutron rocket promises a lot of growth for the company, it still ties with some major risks which can't be easily ignored. First of all, the Archimedes engine is not yet meeting its goals. It produces 0.8 MN of thrust instead of the 1 MN target. It burns for 112 seconds but needs to reach 180 seconds. Also, it can only be reused twice so far, while the goal is to reuse it 10 times. Secondly, building this rocket needs a lot of R&D funding, which is why Rocket Lab is burning through cash, making it tougher for the company to maintain financial health. Lastly, SpaceX's Falcon 9 already dominates the mid-lift market with proven reliability, and it will not be easy to bring their customers to divert to Neutron until it's fully ready to prove its strength on the real ground. So, Rocket Lab has to resolve technical issues in order to launch in 2026 as scheduled. While turning to financials, I have to admit that Rocket Lab's revenue growth has been really impressive. Annual sales climbed from $62 million in 2021 to $436 million in 2024, representing 78 % year-over-year (YoY) growth in 2024. This was driven by more launches, 16 Electron missions in 2024 versus 10 in 2023, and expanded deliveries of space systems. The space company's Gross profit turned positive in 2024 at $116 million versus $51 million in 2023 as production scaled. Operating results remain deeply negative with a 2024 GAAP operating loss of $189.8 million, roughly 43 % of revenue, up from a $177.9 million loss in 2023, reflecting rising R&D and SG&A. Rocket Lab is investing heavily in new technology such as Neutron and vertical integration, so operating margins are under pressure. Free cash flow has been negative each year, around $116 million in 2024, an improvement from $154 million in 2023. High capital spending of $28.7 million in Q1 2025 and lumpiness from contract timing kept GAAP operating cash flow deeply negative at $54.2 million in Q1 2025. However, The balance sheet has grown aggressively. Total liabilities rose to $823.7 million by Q1 2025 from $386.7 million in 2023 as the company funded its expansion. This includes a $345.9 million convertible note issuance and borrowings for new facilities. Equity financing offset this as Rocket Lab issued convertible preferred stock of 51 million shares in early 2025, boosting additional paid-in capital by $109 million. Moreover, the company held $517 million in cash, equivalents and marketable securities, up from $378 million at end-2024, providing a cash runway for scaling. Inventory and contract assets grew as production ramped, but contract liabilities and deferred revenue rose too, reflecting strong future bookings. Overall, the balance sheet shows healthy liquidity and significant R&D investment a trade-off for near-term losses but supporting the ability to scale new launch and space infrastructure offerings. Over the last four quarters, Rocket Lab has consistently beaten analysts' estimates on both the top and bottom lines. In Q1 2025, revenue was $122.6 million, up 32 % from Q1 2024. Space Systems accounted for $85 million of Q1 sales, with the remainder coming from launch services. Operating loss widened to $59.2 million versus $43.1 million a year earlier, and GAAP net loss was $60.6 million or $0.12 per share, reflecting ramped-up R&D and near-term investment. The firm reported a backlog of $1.067 billion at quarter-end, with 56 % expected to convert to revenue in 12 months, giving visibility into future bookings. Rocket Lab's $1.067 billion backlog at Q1 2025 isn't just a tally of orders; it's a testament to growing trust from commercial players and national security clients. Launch-related work has nearly doubled year-over-year, now making up 40 % of the total, signalling a structural shift. With Neutron locked into the Pentagon's $5.6 billion NSSL program and Electron demand soaring past 20 launches this year, Rocket Lab is evolving into a strategic supplier for recurring US government missions. About 56 % of the backlog converts to revenue within 12 months, offering real visibility and genuine excitement for what's ahead. For Q2 2025, management guided revenue of $130140 million and gross margins of 3032 %, suggesting another high-revenue quarter. Near-term profitability remains challenged by heavy spending on Neutron development and new facilities. As we look ahead, Analysts anticipate that Rocket Lab will achieve profitability by 2027. This projection aligns with the company's plans to scale up its Neutron rocket launches and reduce capital expenditures, potentially generating approximately $80 million in net income on $1.25 billion in revenue that year. In the interim, Rocket Lab is expected to remain unprofitable, with estimated losses of $0.38 per share in 2025 and $0.30 per share in 2026. However, the company anticipates becoming cash flow positive by 2026, driven by increased launch cadence and revenue growth. Rocket Lab's stock has been a hot topic among Wall Street's biggest names, and their recent guru trades tell an interesting story. On March 31, 2025, Cathie Wood's Ark Invest trimmed its RKLB holding by 30%, selling roughly 1.07 million shares, which now leaves her with 2.47 million shares. I believe she's taking profits after a strong run, but still keeping a sizable stake. That same day, Renaissance Technologies (Trades, Portfolio) quietly reduced by 16.5%, offloading around 300,000 shares (leaving 1.52 million). I think this modest trim hints at cautious optimism, they like the long-term growth story but are wary of near-term execution risk. Value guru Joel Greenblatt (Trades, Portfolio) also dialed back 24%, selling about 67,500 shares to land at roughly 214,000 shares. I believe he's locking in gains here, even value investors need to book some profit when a high-beta name spikes. Most dramatically, Paul Tudor Jones slashed 92.8% of his position, offloading roughly 286,000 shares and retaining only 22,000. That's a major vote of no confidence, and I think it signals he's moved on to other bigger splash opportunities. By contrast, Steven Cohen (Trades, Portfolio) made a splashy new buy on March 31, picking up 1.04 million shares. I believe his Millennium fund sees Neutron's upcoming launch (and the $5055 M price point) as a real catalyst. Overall, it's a mix of profit-taking, cautious trimming, and a couple of optimistic buys, telling me that Rocket Lab's runway still excites me, even if some big players are managing risk along the way. Those who have been closest to Rocket Lab have been selling off their stakes lately, and those who follow the market say their actions indicate a lack of confidence in the company's immediate prospects. Any time after March 17, 2025 and prior to July 23, 2025, anyone who follows the plan can sell shares just as Klein or Kampani did. I think the simultaneous selling by both executives suggests they are taking measures together to reduce risk ahead of Neutron being launched later than expected. On March 14, Adam C. Spice, the CFO, shifted 62,843 shares at $18.18, in total raising about $1.14 million. I personally believe the sale means he's confident in making gains after Electron's performance and still managing his own risk until the Neutron news comes. By late 2024, a big surge of director-level sales took place. On December 11, Director Nina Armagno offloaded 10,000 shares at a price of $23.63. On December 3, Director Alexander R. Slusky offloaded 100,000 shares for $23.64. In my opinion, these deals, especially Slusky's substantial one, suggest that board members acted fast during the upturn after the IDIQ contract ended to collect profits. In earlier deals, both Adam Spice and Frank Klein sold shares, parting with 62,511 and 35,988 shares, respectively, near $24.15 on November 25. I think, insiders prefer to secure their earnings from Rocket Lab's small missions, wait out expectations around Neutron and enter the market again when there are valued gains to pursue. Rocket Lab currently trades at 27.7 sales, compared with the aerospace & defense sector average of 2.7. This implies investors expect significantly higher growth despite today's modest revenues. For context, BWX Technologies (NYSE:BWXT) is valued at 34.3 earnings, roughly in line with the sector average, while ATI (NYSE:ATI) sits at 27.6 earnings, closer to broader industrial valuations. By contrast, Rocket Lab's 27.7-sales multiple appears elevated relative to peers. With roughly 461 million shares outstanding and a share price near $26.79, Rocket Lab's market capitalization is about $12.36 billion. To justify that valuation via a reverse DCF, investors would need to receive $12.36 billion in present-value free cash flow. Assuming each launch yields $52.5 million in revenue with a 5 % free cash flow margin (about $2.625 million per launch), Rocket Lab would have to complete roughly 4,710 successful launches ($12.36 billion $2.625 million) to generate that level of cash flow. Management guides toward approximately 25 Neutron launches annually beginning in 2027. At that cadence, achieving 4,710 launches would take nearly 189 years (4,710 25). Even if Rocket Lab hits its target cadence and 5 % margin, the implied payback period remains extremely long, underscoring today's lofty valuation. GuruFocus GF Model also indicates that GF Value for Rocket Lab USA in one year is $15.73, suggesting a downside of -43.53% from the current price of $27.86. In short, by standard DCF metrics and Gurufocus GF Model, Rocket Lab looks significantly overvalued today. Rocket Lab's stock has had a wild ride, plummeting early in 2025, ripping higher on Neutron hype and big defense wins, then dropping again after softer guidance. Its backlog and government contracts suggest real momentum, and Neutron's cheaper, reusable design could shake up the launch market. Yet the company is still losing money, burning cash on R&D and new facilities, and insiders and big funds have trimmed positions. At today's rich valuation, you're paying for future success, not current profits. If Neutron delivers and margins improve, Rocket Lab could reward investors, but there's plenty of execution risk along the way. This article first appeared on GuruFocus. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
05-06-2025
- Business
- Yahoo
Big Dreams, Bigger Risks: Rocket Lab's Neutron Bet Faces Market Gravity
Shares of Rocket Lab (NASDAQ:RKLB) rallied immensely after the first-half decline in 2024, supported by both the business surrounding the neutron mission and contracts with governments. The stock is now 544% up over past 52-weeks. Earlier in the month, the space company reported strong Q1 findings, highlighted main achievement points and confirmed the company's key strategies. However, the company's share price dropped about 12% after it issued soft guidance and the earnings release. I think many ignore how strong Neutron will be in 2025, so I see this as knee-jerk selling. Neutron, a cheaper and reusable rocket, gives Rocket Lab an edge over SpaceX and has already helped the firm begin supplying services to government agencies. For instance, the U.S. Space Force picked Northrop Grumman to participate in the $5.6 billion third phase of its National Security Space Launch program, having selected only five companies. It also won contracts for its HASTE hypersonic vehicle in the U.S. and U.K. programs worth tens of billions. Besides moving into other segments, the company revealed it will buy Mynaric (a laser-communication provider) and develop more advanced satellites, showing their focus on growing in space infrastructure. In addition, Rocket Lab is growing much more quickly than SpaceX, launching nearly 60% more in 2024 than in 2023, which gives it an edge in the space market. Rocket Lab is teaming up with the U.S. Air Force to build its new Neutron rocket, which could transform Rocket Lab and the whole space industry. Neutron is 43 meters high, its diameter is 7 meters, and it is capable of transporting 13,000 kg to low-Earth orbit. The Archimedes engines allow it to lift off by creating 480,000 kg of thrust. I am especially amazed by how much the spacecraft is expected to cost when it launches, at $5055 million. In comparison, SpaceX's Falcon 9 costs around $67 million for every launch and it can accommodate 22,800 kg, set at about $3,000 per kilogram. Neutron is cheaper for each launch, but it costs about $4,000$4,300 per kilogram, so it is less cost-effective. Even so, Neutron has some additional strengths. It is suitable for frequent medium-lift missions such as those needed for the Kuiper satellite constellation operated by Amazon (AMZN). Having a reusable rocket and built-in fairings means the process can be performed faster, saving money. Although Falcon 9 is built for many missions, Neutron concentrates on getting to orbit as quickly as possible and reliably. Being able to make most of their own parts at Rocket Lab helps control their budget and maintain a high standard of quality. Because it has launch sites in the U.S. and New Zealand, the company is able to provide more options for when customers can book a launch. Usually, the cost plays a big role in deciding when to launch, and Neutron's more affordable price might appeal to many users. I also like that it can be used again, which should boost Rocket Lab's earnings as it improves how to collect them. Being picked for the NSSL list on a $5.6 billion indefinite delivery, indefinite quantity (IDIQ) contract until 2029 from the U.S. Space Force is a strong vote of confidence in Neutron's abilities. When the launch starts next year, I expect investor interest to rise. If Rocket Lab successfully scales Neutron launches, it could generate about $787.5 million in annual revenue by flying 15 rockets a year at an average $52.5 million per launch (15 $52.5 million = $787.5 million). Assuming a conservative 5 % net margin, roughly in line with established aerospace peers like Northrop Grumman, each launch would contribute about $2.625 million in profit (5 % $52.5 million). At that pace, total owner earnings could reach approximately $39.4 million annually (15 launches $2.625 million). While Neutron's reusable design and in-house manufacturing could improve margins over time, this 5 % baseline provides a realistic near-term projection grounded in industry comparables. Moreover, the global commercial launch services market is expected to be worth around $12 billion to $15 billion by 2027, with the mid-lift segment (515 t payload) alone accounting for roughly $4 billion. Neutron targets that mid-lift bracket, giving Rocket Lab access to potentially $400 million$800 million per year from mega-constellation projects (e.g., Amazon Kuiper) plus U.S. government and other mid-satellite contracts. While the Neutron rocket promises a lot of growth for the company, it still ties with some major risks which can't be easily ignored. First of all, the Archimedes engine is not yet meeting its goals. It produces 0.8 MN of thrust instead of the 1 MN target. It burns for 112 seconds but needs to reach 180 seconds. Also, it can only be reused twice so far, while the goal is to reuse it 10 times. Secondly, building this rocket needs a lot of R&D funding, which is why Rocket Lab is burning through cash, making it tougher for the company to maintain financial health. Lastly, SpaceX's Falcon 9 already dominates the mid-lift market with proven reliability, and it will not be easy to bring their customers to divert to Neutron until it's fully ready to prove its strength on the real ground. So, Rocket Lab has to resolve technical issues in order to launch in 2026 as scheduled. While turning to financials, I have to admit that Rocket Lab's revenue growth has been really impressive. Annual sales climbed from $62 million in 2021 to $436 million in 2024, representing 78 % year-over-year (YoY) growth in 2024. This was driven by more launches, 16 Electron missions in 2024 versus 10 in 2023, and expanded deliveries of space systems. The space company's Gross profit turned positive in 2024 at $116 million versus $51 million in 2023 as production scaled. Operating results remain deeply negative with a 2024 GAAP operating loss of $189.8 million, roughly 43 % of revenue, up from a $177.9 million loss in 2023, reflecting rising R&D and SG&A. Rocket Lab is investing heavily in new technology such as Neutron and vertical integration, so operating margins are under pressure. Free cash flow has been negative each year, around $116 million in 2024, an improvement from $154 million in 2023. High capital spending of $28.7 million in Q1 2025 and lumpiness from contract timing kept GAAP operating cash flow deeply negative at $54.2 million in Q1 2025. However, The balance sheet has grown aggressively. Total liabilities rose to $823.7 million by Q1 2025 from $386.7 million in 2023 as the company funded its expansion. This includes a $345.9 million convertible note issuance and borrowings for new facilities. Equity financing offset this as Rocket Lab issued convertible preferred stock of 51 million shares in early 2025, boosting additional paid-in capital by $109 million. Moreover, the company held $517 million in cash, equivalents and marketable securities, up from $378 million at end-2024, providing a cash runway for scaling. Inventory and contract assets grew as production ramped, but contract liabilities and deferred revenue rose too, reflecting strong future bookings. Overall, the balance sheet shows healthy liquidity and significant R&D investment a trade-off for near-term losses but supporting the ability to scale new launch and space infrastructure offerings. Over the last four quarters, Rocket Lab has consistently beaten analysts' estimates on both the top and bottom lines. In Q1 2025, revenue was $122.6 million, up 32 % from Q1 2024. Space Systems accounted for $85 million of Q1 sales, with the remainder coming from launch services. Operating loss widened to $59.2 million versus $43.1 million a year earlier, and GAAP net loss was $60.6 million or $0.12 per share, reflecting ramped-up R&D and near-term investment. The firm reported a backlog of $1.067 billion at quarter-end, with 56 % expected to convert to revenue in 12 months, giving visibility into future bookings. Rocket Lab's $1.067 billion backlog at Q1 2025 isn't just a tally of orders; it's a testament to growing trust from commercial players and national security clients. Launch-related work has nearly doubled year-over-year, now making up 40 % of the total, signalling a structural shift. With Neutron locked into the Pentagon's $5.6 billion NSSL program and Electron demand soaring past 20 launches this year, Rocket Lab is evolving into a strategic supplier for recurring US government missions. About 56 % of the backlog converts to revenue within 12 months, offering real visibility and genuine excitement for what's ahead. For Q2 2025, management guided revenue of $130140 million and gross margins of 3032 %, suggesting another high-revenue quarter. Near-term profitability remains challenged by heavy spending on Neutron development and new facilities. As we look ahead, Analysts anticipate that Rocket Lab will achieve profitability by 2027. This projection aligns with the company's plans to scale up its Neutron rocket launches and reduce capital expenditures, potentially generating approximately $80 million in net income on $1.25 billion in revenue that year. In the interim, Rocket Lab is expected to remain unprofitable, with estimated losses of $0.38 per share in 2025 and $0.30 per share in 2026. However, the company anticipates becoming cash flow positive by 2026, driven by increased launch cadence and revenue growth. Rocket Lab's stock has been a hot topic among Wall Street's biggest names, and their recent guru trades tell an interesting story. On March 31, 2025, Cathie Wood's Ark Invest trimmed its RKLB holding by 30%, selling roughly 1.07 million shares, which now leaves her with 2.47 million shares. I believe she's taking profits after a strong run, but still keeping a sizable stake. That same day, Renaissance Technologies (Trades, Portfolio) quietly reduced by 16.5%, offloading around 300,000 shares (leaving 1.52 million). I think this modest trim hints at cautious optimism, they like the long-term growth story but are wary of near-term execution risk. Value guru Joel Greenblatt (Trades, Portfolio) also dialed back 24%, selling about 67,500 shares to land at roughly 214,000 shares. I believe he's locking in gains here, even value investors need to book some profit when a high-beta name spikes. Most dramatically, Paul Tudor Jones slashed 92.8% of his position, offloading roughly 286,000 shares and retaining only 22,000. That's a major vote of no confidence, and I think it signals he's moved on to other bigger splash opportunities. By contrast, Steven Cohen (Trades, Portfolio) made a splashy new buy on March 31, picking up 1.04 million shares. I believe his Millennium fund sees Neutron's upcoming launch (and the $5055 M price point) as a real catalyst. Overall, it's a mix of profit-taking, cautious trimming, and a couple of optimistic buys, telling me that Rocket Lab's runway still excites me, even if some big players are managing risk along the way. Those who have been closest to Rocket Lab have been selling off their stakes lately, and those who follow the market say their actions indicate a lack of confidence in the company's immediate prospects. Any time after March 17, 2025 and prior to July 23, 2025, anyone who follows the plan can sell shares just as Klein or Kampani did. I think the simultaneous selling by both executives suggests they are taking measures together to reduce risk ahead of Neutron being launched later than expected. On March 14, Adam C. Spice, the CFO, shifted 62,843 shares at $18.18, in total raising about $1.14 million. I personally believe the sale means he's confident in making gains after Electron's performance and still managing his own risk until the Neutron news comes. By late 2024, a big surge of director-level sales took place. On December 11, Director Nina Armagno offloaded 10,000 shares at a price of $23.63. On December 3, Director Alexander R. Slusky offloaded 100,000 shares for $23.64. In my opinion, these deals, especially Slusky's substantial one, suggest that board members acted fast during the upturn after the IDIQ contract ended to collect profits. In earlier deals, both Adam Spice and Frank Klein sold shares, parting with 62,511 and 35,988 shares, respectively, near $24.15 on November 25. I think, insiders prefer to secure their earnings from Rocket Lab's small missions, wait out expectations around Neutron and enter the market again when there are valued gains to pursue. Rocket Lab currently trades at 27.7 sales, compared with the aerospace & defense sector average of 2.7. This implies investors expect significantly higher growth despite today's modest revenues. For context, BWX Technologies (NYSE:BWXT) is valued at 34.3 earnings, roughly in line with the sector average, while ATI (NYSE:ATI) sits at 27.6 earnings, closer to broader industrial valuations. By contrast, Rocket Lab's 27.7-sales multiple appears elevated relative to peers. With roughly 461 million shares outstanding and a share price near $26.79, Rocket Lab's market capitalization is about $12.36 billion. To justify that valuation via a reverse DCF, investors would need to receive $12.36 billion in present-value free cash flow. Assuming each launch yields $52.5 million in revenue with a 5 % free cash flow margin (about $2.625 million per launch), Rocket Lab would have to complete roughly 4,710 successful launches ($12.36 billion $2.625 million) to generate that level of cash flow. Management guides toward approximately 25 Neutron launches annually beginning in 2027. At that cadence, achieving 4,710 launches would take nearly 189 years (4,710 25). Even if Rocket Lab hits its target cadence and 5 % margin, the implied payback period remains extremely long, underscoring today's lofty valuation. GuruFocus GF Model also indicates that GF Value for Rocket Lab USA in one year is $15.73, suggesting a downside of -43.53% from the current price of $27.86. In short, by standard DCF metrics and Gurufocus GF Model, Rocket Lab looks significantly overvalued today. Rocket Lab's stock has had a wild ride, plummeting early in 2025, ripping higher on Neutron hype and big defense wins, then dropping again after softer guidance. Its backlog and government contracts suggest real momentum, and Neutron's cheaper, reusable design could shake up the launch market. Yet the company is still losing money, burning cash on R&D and new facilities, and insiders and big funds have trimmed positions. At today's rich valuation, you're paying for future success, not current profits. If Neutron delivers and margins improve, Rocket Lab could reward investors, but there's plenty of execution risk along the way. This article first appeared on GuruFocus. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
01-06-2025
- Business
- Yahoo
SpaceX deploys 27 Starlink satellites from the West Coast
May 31 (UPI) -- SpaceX ended May with another successful launch of its Falcon 9 rocket Saturday afternoon at its West Coast launch facility at Vandenberg Space Force Base in California. The launch occurred at 1:10 p.m. PDT with a payload of 27 Starlink satellites bound for low-Earth orbit, SpaceflightNow reported. It was the Falcon 9's 16th successful launch and the 25th for its first-stage booster rocket. The booster rocket successfully landed on the "Of Course I Still Love You" drone ship in the Pacific Ocean. The successful landing marked the 133rd successful booster rocket landing and 455th overall on the droneship. Anne Mason, director of National Security Space Launch for SpaceX, said at least 170 more Falcon launches are planned this year. "This demonstrates how Falcon's reusability and reliability ... have been critical to supporting assured access to space," Mason told media before the afternoon launch. SpaceX is producing a second-stage rocket every 2.5 days to meet the demand for the large number of planned launches. Officials for the Elon Musk-owned space company also are looking to buy Space Launch Complex 6 at Vandenberg Space Force Base to support the ambitious launch schedule.
Business Wire
08-05-2025
- Business
- Business Wire
Rocket Lab Announces First Quarter 2025 Financial Results, Posting Quarterly Revenue of $123m Representing 32% Year-on-Year Growth
LONG BEACH, Calif.--(BUSINESS WIRE)--Rocket Lab USA, Inc. (Nasdaq: RKLB) ('Rocket Lab,' 'the Company,' 'we,' 'us,' or 'our'), a global leader in launch services and space systems, today shared the financial results for fiscal first quarter ended March 31, 2025. Rocket Lab founder and CEO Sir Peter Beck said: 'Rocket Lab has delivered a strong first quarter performance, with wins across our launch and space systems divisions reflected in our near-record $123 million revenue – at the top end of our guidance and a 32% increase year-on-year compared to Q1 2024. We also remain confident in our ability to execute and deliver on what's set to be another strong quarter, with our Q2 2025 revenue guidance in the $130m-$140 million range – which would reflect the underlying strength of our increasingly diverse business within the current geopolitical climate, showing the resilience of our vertically integrated end-to-end space company business model. 'We've also significantly reshaped Rocket Lab these past few years as we've completed multiple acquisitions, announced our intention to expand into Europe, and entered new markets. To better align our legal entities with our business objectives and our U.S. Government security requirements for our expanding national security focus, we plan to implement a new holding company structure. This new structure will enable more efficient management and growth of Rocket Lab, while better managing our risks and liabilities. It's a positive change that supports our further growth across the commercial, civil, and national defense space industries.' Business Highlights for the First Quarter 2025, plus updates since March 31, 2025. Launch: Successfully on-ramped the Neutron rocket to the Department of Defense's $5.6 billion National Security Space Launch ('NSSL') Phase 3 Lane 1 program. Rocket Lab is now one of only five launch providers and the only publicly-traded company selected by the U.S. Space Force as eligible to launch the nation's highest priority national security missions. As part of the on-ramp to the NSSL program, Rocket Lab received a $5 million task order to perform a capabilities assessment demonstrating the Company's approach to mission assurance for NSSL launches. Signed a Neutron launch contract with the U.S. Air Force to launch a rocket-based point-to-point transportation system experiment. The mission is scheduled for a return-to-Earth launch on Neutron no earlier than 2026. Successfully launched five Electron missions for three separate commercial satellite constellation operators in Q1 2025. As of today, Electron remains the world's most frequently launched small orbital rocket, the United States' second most-frequently launched rocket annually, and one of only two commercial U.S. rockets to have deployed payloads to orbit multiple times in 2025. Awarded a new HASTE launch contract by Kratos for the Department of Defense's MACH-TB 2.0 program. The mission will launch from Rocket Lab Launch Complex 2 in Virginia no earlier than Q1 2026 and is the first full-scale flight test awarded by Kratos under the $1.45 billion MACH-TB 2.0 program. Selected for two multi-billion dollar United States and United Kingdom government programs that make Rocket Lab's HASTE launch vehicle eligible to compete for hypersonic flight tests. The two programs are the U.S. Air Force's Enterprise-Wide Agile Acquisition Contract ('EWAAC'), a $46 billion program to develop new military capabilities; and the United Kingdom's Ministry of Defence's ('UK MOD') Hypersonic Technologies & Capability Development Framework ('HTCDF'), a ~$1.3 billion (£1 billion) framework to rapidly develop advanced hypersonic capabilities for the allied nation. Selection to the UK MOD's program marks the first time Rocket Lab's HASTE launch services are now available to the United Kingdom. Space Systems: Announced intention to acquire Mynaric, a leading provider of laser optical communications terminals for air, space, and mobile applications. This transaction, if completed, would represent Rocket Lab expansion into Europe, with the intention of scaling the production of Mynaric's optical terminals to serve a growing list of government and commercial single satellites and large constellations, as well as integrate the products within Rocket Lab's own future satellite constellation. Expanded Rocket Lab's space systems line-up to include standardized and highly-scalable products across space-grade solar power and satellite radios. These include the STARRAY family of customizable, next-generation solar arrays to meet the power requirements of small satellite missions; the expanded suite of Frontier radios for reliable command and control of satellite missions in Earth orbit and deep space; and next-generation space software for satellite constellation management. Second Quarter 2025 Guidance For the second quarter of 2025, Rocket Lab expects: Revenue between $130 million and $140 million. GAAP Gross Margins between 30% and 32%. Non-GAAP Gross Margins between 34% and 36%. GAAP Operating Expenses between $96 million and $98 million. Non-GAAP Operating Expenses between $82 million and $84 million. Expected Interest Expense (Income), net $3.1 million. Adjusted EBITDA loss of $28 million and $30 million. Basic Weighted Average Common Shares Outstanding of 514 million, including approximately 51 million of Series A Convertible Participating Preferred Stock. See 'Use of Non-GAAP Financial Measures' below for an explanation of our use of Non-GAAP financial measures, and the reconciliation of historical Non-GAAP measures to the comparable GAAP measures in the tables attached to this press release. We have not provided a reconciliation for the forward-looking Non-GAAP Gross Margin, Non-GAAP Operating Expenses or Adjusted EBITDA expectations for Q2 2025 described above because, without unreasonable efforts, we are unable to predict with reasonable certainty the amount and timing of adjustments that are used to calculate these non-GAAP financial measures, particularly related to stock-based compensation and its related tax effects. Stock-based compensation is currently expected to range from $13 million to $14 million in Q2 2025. Plan to reorganize corporate legal structure Rocket Lab today announced it intends to establish a holding company structure. The new parent company, named Rocket Lab Corporation, will replace Rocket Lab USA, Inc. as the public company listed on the Nasdaq stock exchange and will retain the 'RKLB' ticker symbol. Existing shares of Rocket Lab will automatically convert on a one-for-one basis into shares of common stock of Rocket Lab Corporation. Trading is expected to continue uninterrupted on the Nasdaq Stock Market. The transaction will be accomplished pursuant to Section 251(g) of the Delaware General Corporation Law and no action will be required by Rocket Lab stockholders. Rocket Lab's Board of Directors and its executive officers, including founder and CEO Sir Peter Beck, will continue in their same roles at Rocket Lab Corporation. Rocket Lab USA, Inc. will become a direct wholly owned subsidiary of Rocket Lab Corporation and continue to hold its existing subsidiaries and assets across the United States, Canada, New Zealand, and Australia. The new company structure is expected to be in effect by June 1, 2025. As a result of the timing of the planned holding company reorganization, the company will hold its annual meeting of stockholders later this year, and intends to provide an update to investors on the anticipated timing of the 2025 annual meeting of stockholders following completion of the holding company reorganization transaction. Conference Call Information Rocket Lab will host a conference call for investors at 2 p.m. PT (5 p.m. ET) today to discuss these business highlights and financial results for our first quarter, to provide our outlook for the second quarter, and other updates. The live webcast and a replay of the webcast will be available on Rocket Lab's Investor Relations website: About Rocket Lab Founded in 2006, Rocket Lab is an end-to-end space company with an established track record of mission success. We deliver reliable launch services, satellite manufacture, spacecraft components, and on-orbit management solutions that make it faster, easier, and more affordable to access space. Headquartered in Long Beach, California, Rocket Lab designs and manufactures the Electron small orbital launch vehicle, a family of flight-proven spacecraft, and the Company is developing the large Neutron launch vehicle for constellation deployment. Since its first orbital launch in January 2018, Rocket Lab's Electron launch vehicle has become the second most frequently launched U.S. rocket annually and has delivered more than 200 satellites to orbit for private and public sector organizations, enabling operations in national security, scientific research, space debris mitigation, Earth observation, climate monitoring, and communications. Rocket Lab's Photon spacecraft platform has been selected to support NASA missions to the Moon and Mars, as well as the first private commercial mission to Venus. Rocket Lab has three launch pads at two launch sites, including two launch pads at a private orbital launch site located in New Zealand and a third launch pad in Virginia. To learn more, visit Forward-Looking Statements This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in Section 27A of the Securities Act of 1933, as amended (the 'Securities Act') and Section 21E of the Securities Exchange Act of 1934, as amended (the 'Exchange Act'). All statements contained in this press release other than statements of historical fact, including, without limitation, statements regarding our expectations of financial results for the first quarter of 2025, launch and space systems operations, launch schedule and window, safe and repeatable access to space, Neutron development and anticipated timeline to launch, operational expansion and business strategy are forward-looking statements. The words 'believe,' 'may,' 'will,' 'estimate,' 'potential,' 'continue,' 'anticipate,' 'intend,' 'expect,' 'strategy,' 'future,' 'could,' 'would,' 'project,' 'plan,' 'target,' and similar expressions are intended to identify forward-looking statements, though not all forward-looking statements use these words or expressions. These statements are neither promises nor guarantees, but involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements, including but not limited to the factors, risks and uncertainties included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024, as such factors may be updated from time to time in our other filings with the Securities and Exchange Commission (the 'SEC'), accessible on the SEC's website at and the Investor Relations section of our website at which could cause our actual results to differ materially from those indicated by the forward-looking statements made in this press release. Any such forward-looking statements represent management's estimates as of the date of this press release. While we may elect to update such forward-looking statements at some point in the future, we disclaim any obligation to do so, even if subsequent events cause our views to change. + Use of Non-GAAP Financial Measures We supplement the reporting of our financial information determined under Generally Accepted Accounting Principles in the United States of America ('GAAP') with certain non-GAAP financial information. The non-GAAP financial information presented excludes certain significant items that may not be indicative of, or are unrelated to, results from our ongoing business operations. We believe that these non-GAAP measures provide investors with additional insight into the company's ongoing business performance. These non-GAAP measures should not be considered in isolation or as a substitute for the related GAAP measures, and other companies may define such measures differently. We encourage investors to review our financial statements and publicly filed reports in their entirety and not to rely on any single financial measure. Reconciliation of the non-GAAP financial information to the corresponding GAAP measures for the historical periods disclosed are included at the end of the tables in this press release. We have not provided a reconciliation for forward-looking non-GAAP financial measures because, without unreasonable efforts, we are unable to predict with reasonable certainty the amount and timing of adjustments that are used to calculate these non-GAAP financial measures, particularly related to stock-based compensation and its related tax effects. The following definitions are provided: + Adjusted EBITDA EBITDA is defined as earnings before interest, taxes, depreciation and amortization. Adjusted EBITDA further excludes items of income or loss that we characterize as unrepresentative of our ongoing operations. Such items are excluded from net income or loss to determine Adjusted EBITDA. Management believes this measure provides investors meaningful insight into results from ongoing operations. + Other Non-GAAP Financial Measures Non-GAAP gross profit, gross margin, research and development, net, selling, general and administrative, operating expenses, operating loss and total other income (expense), net, further excludes items of income or loss that we characterize as unrepresentative of our ongoing operations. Such items are excluded from the applicable GAAP financial measure. Management believes these non-GAAP measures provide investors meaningful insight into results from ongoing operations. Three Months Ended March 31, 2025 2024 Revenues: Product revenues $ 80,804 $ 54,146 Service revenues 41,765 38,621 Total revenues 122,569 92,767 Cost of revenues: Cost of product revenues 53,869 40,827 Cost of service revenues 33,453 27,766 Total cost of revenues 87,322 68,593 Gross profit 35,247 24,174 Operating expenses: Research and development, net 55,109 38,504 Selling, general and administrative 39,326 28,749 Total operating expenses 94,435 67,253 Operating loss (59,188 ) (43,079 ) Other income (expense): Interest expense, net (2,586 ) (898 ) (Loss) gain on foreign exchange (134 ) 311 Other income (expense), net 479 (589 ) Total other expense, net (2,241 ) (1,176 ) Loss before income taxes (61,429 ) (44,255 ) Benefit (provision) for income taxes 813 (5 ) Net loss $ (60,616 ) $ (44,260 ) Net loss per share attributable to Rocket Lab USA, Inc.: Basic and diluted $ (0.12 ) $ (0.09 ) Weighted-average common shares outstanding: Basic and diluted 505,614,185 489,994,709 Expand ROCKET LAB USA, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS AS OF MARCH 31, 2025 AND DECEMBER 31, 2024 (unaudited; in thousands, except share and per share data) (unaudited) December 31, 2024 Assets Current assets: Cash and cash equivalents $ 303,149 $ 271,042 Marketable securities, current 125,247 147,948 Accounts receivable, net 39,413 36,440 Contract assets 60,943 63,108 Inventories 125,588 119,074 Prepaids and other current assets 70,510 55,009 Total current assets 724,850 692,621 Non-current assets: Property, plant and equipment, net 213,990 194,838 Intangible assets, net 56,181 58,637 Goodwill 71,020 71,020 Right-of-use assets - operating leases 52,137 53,664 Right-of-use assets - finance leases 14,272 14,396 Marketable securities, non-current 83,947 60,686 Restricted cash 5,102 4,260 Deferred income tax assets, net 3,765 3,010 Other non-current assets 29,709 31,210 Total assets $ 1,254,973 $ 1,184,342 Liabilities and Stockholders' Equity Current liabilities: Trade payables $ 70,203 $ 53,059 Accrued expenses 12,141 19,460 Employee benefits payable 21,959 20,847 Contract liabilities 206,867 216,160 Current installments of long-term borrowings 20,490 12,045 Other current liabilities 16,456 17,954 Total current liabilities 348,116 339,525 Non-current liabilities: Convertible senior notes, net 345,926 345,392 Long-term borrowings, net, excluding current installments 57,728 44,049 Non-current operating lease liabilities 50,643 51,965 Non-current finance lease liabilities 14,897 14,970 Deferred tax liabilities 1,027 891 Other non-current liabilities 5,342 5,097 Total liabilities 823,679 801,889 COMMITMENTS AND CONTINGENCIES Stockholders' equity: Preferred stock, $0.0001 par value; authorized shares: 100,000,000; issued and outstanding shares: 50,951,250 and 0 at March 31, 2025 and December 31, 2024, respectively 5 — Common stock, $0.0001 par value; authorized shares: 2,500,000,000; issued shares: 511,492,231 and 504,453,785 at March 31, 2025 and December 31, 2024, respectively; outstanding shares: 460,540,981 and 504,453,785 at March 31, 2025 and December 31, 2024, respectively 46 50 Treasury stock, at cost; shares: 50,951,250 and 0 at March 31, 2025 and December 31, 2024, respectively — — Additional paid-in capital 1,307,930 1,198,909 Accumulated deficit (874,317 ) (813,701 ) Accumulated other comprehensive loss (2,370 ) (2,805 ) Total stockholders' equity 431,294 382,453 Total liabilities and stockholders' equity $ 1,254,973 $ 1,184,342 Expand ROCKET LAB USA, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE THREE MONTHS ENDED MARCH 31, 2025 AND 2024 (unaudited; in thousands) For the Three Months Ended March 31, 2025 2024 CASH FLOWS FROM OPERATING ACTIVITIES: Net loss $ (60,616 ) $ (44,260 ) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 8,707 8,313 Stock-based compensation expense 19,234 13,093 Loss on disposal of assets 13 3 Loss on extinguishment of long-term debt — 1,330 Amortization of debt issuance costs and discount 831 639 Noncash lease expense 1,519 1,491 Change in the fair value of contingent consideration — (271 ) Accretion of marketable securities purchased at a discount (561 ) (842 ) Deferred income taxes (585 ) 78 Changes in operating assets and liabilities: Accounts receivable, net (2,974 ) 3,939 Contract assets 2,165 (1,944 ) Inventories (6,308 ) 7,509 Prepaids and other current assets (9,617 ) (5,303 ) Other non-current assets 1,571 (4,266 ) Trade payables 9,779 (1,673 ) Accrued expenses (2,712 ) 3,200 Employee benefits payables (253 ) (622 ) Contract liabilities (9,294 ) 11,205 Other current liabilities (3,699 ) 6,729 Non-current lease liabilities (1,670 ) (1,425 ) Other non-current liabilities 245 489 Net cash used in operating activities (54,225 ) (2,588 ) CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of property, equipment and software (28,677 ) (19,177 ) Proceeds on disposal of assets, net 16 — Purchases of marketable securities (84,639 ) (79,359 ) Maturities of marketable securities 84,699 46,280 Net cash used in investing activities (28,601 ) (52,256 ) CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from ATM Equity Offering 92,806 — Issuance costs related to ATM Equity Offering (2,088 ) — Proceeds from the exercise of stock options 48 943 Proceeds from Employee Stock Purchase Plan 2,237 507 Proceeds from sale of employees restricted stock units to cover taxes 17,310 5,119 Minimum tax withholding paid on behalf of employees for restricted stock units (16,577 ) (5,163 ) Purchase of capped calls related to issuance of convertible senior notes — (43,168 ) Proceeds from issuance of convertible senior notes — 355,000 Proceeds from secured term loan 25,000 — Repayments on secured term loan (2,894 ) (43,215 ) Payment of debt issuance costs (278 ) (11,226 ) Finance lease principal payments (61 ) (90 ) Net cash provided by financing activities 115,503 258,707 Effect of exchange rate changes on cash and cash equivalents 272 (519 ) Net increase in cash and cash equivalents and restricted cash 32,949 203,344 Cash and cash equivalents, and restricted cash, beginning of period 275,302 166,434 Cash and cash equivalents, and restricted cash, end of period $ 308,251 $ 369,778 Expand ROCKET LAB USA, INC. AND SUBSIDIARIES RECONCILIATION OF NON-GAAP FINANCIAL MEASURES FOR THE THREE MONTHS ENDED MARCH 31, 2025 AND 2024 (unaudited; in thousands) The tables provided below reconcile the non-GAAP financial measures Adjusted EBITDA, Non-GAAP gross profit, Non-GAAP research and development, net, Non-GAAP selling, general and administrative, Non-GAAP operating expenses, Non-GAAP operating loss and Non-GAAP total other income (expense), net with the most directly comparable GAAP financial measures. See above for additional information on the use of these non-GAAP financial measures. Three Months Ended March 31, 2025 2024 NET LOSS $ (60,616 ) $ (44,260 ) Depreciation 5,689 4,924 Amortization 3,018 3,389 Stock-based compensation expense 19,234 13,093 Transaction costs 1,378 372 Interest expense, net 2,586 898 Change in fair value of contingent consideration — (271 ) (Benefit) provision for income taxes (813 ) 5 Loss (gain) on foreign exchange 134 (311 ) Accretion of marketable securities and cash equivalents purchased at a discount (585 ) (842 ) Loss on disposal of assets 13 3 Loss on extinguishment of debt — 1,330 ADJUSTED EBITDA $ (29,962 ) $ (21,670 ) Expand Three Months Ended March 31, 2025 2024 GAAP Gross profit $ 35,247 $ 24,174 Stock-based compensation 3,920 3,503 Amortization of purchased intangibles and favorable lease 1,823 1,743 Non-GAAP Gross profit $ 40,990 $ 29,420 Non-GAAP Gross margin 33.4 % 31.7 % GAAP Research and development, net $ 55,109 $ 38,504 Stock-based compensation (4,894 ) (3,985 ) Amortization of purchased intangibles and favorable lease (165 ) (229 ) Non-GAAP Research and development, net $ 50,050 $ 34,290 GAAP Selling, general and administrative $ 39,326 $ 28,749 Stock-based compensation (10,420 ) (5,605 ) Amortization of purchased intangibles and favorable lease (776 ) (932 ) Transaction costs (1,378 ) (372 ) Change in fair value of contingent consideration — 271 Non-GAAP Selling, general and administrative $ 26,752 $ 22,111 GAAP Operating expenses $ 94,435 $ 67,253 Stock-based compensation (15,314 ) (9,590 ) Amortization of purchased intangibles and favorable lease (941 ) (1,161 ) Transaction costs (1,378 ) (372 ) Change in fair value of contingent consideration — 271 Non-GAAP Operating expenses $ 76,802 $ 56,401 GAAP Operating loss $ (59,188 ) $ (43,079 ) Total non-GAAP adjustments 23,376 16,098 Non-GAAP Operating loss $ (35,812 ) $ (26,981 ) GAAP Total other expense, net $ (2,241 ) $ (1,176 ) Loss (gain) on foreign exchange 134 (311 ) Loss on disposal of assets 13 3 Loss on extinguishment of debt — 1,330 Non-GAAP Total other expense, net $ (2,094 ) $ (154 ) Expand
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07-04-2025
- Business
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Rocket Lab's New $5.6 Billion Opportunity
The stock market is in turmoil. Investors are worried about the Trump administration's tariffs on international goods and how they will affect corporate profitability. The tariffs are widespread and affect nearly every sector of the market. There is one sector, however, that could potentially feel minimal tariff impact: the space economy. As a national security priority and led by homegrown champions such as SpaceX, private rocket launching and space services are largely built and performed in the United States. Consumer demand also isn't a real factor when it comes to rocket flight companies. Demand is likely to be there through strong and weak economic environments, especially from the U.S. government. It is no surprise then to see Rocket Lab USA (NASDAQ: RKLB) approved to compete for a $5.6 billion launch contract from the United States Space Force. The project, which has a five-year ordering period through 2029, is for high-priority national security missions. Here's what it could mean for Rocket Lab stock going forward. The National Security Space Launch (NSSL) program is going through its procurement period, meaning the U.S. government is asking rocket launch contractors to propose bids for the service. On March 27, Rocket Lab announced it was approved to begin competing for these launch bids. This does not mean the company has won any contracts, but it has the privilege of building a proposal that the U.S. government may pick. Competitors for the project include SpaceX and Blue Origin, although it isn't an exclusive contract to win. At $5.6 billion, this is a huge contract for a company the size of Rocket Lab. It will have a minimum of 30 missions with a potential expansion through 2034. Knowing how government contracts work, this $5.6 billion figure could be raised at points over the next few years. Generating just $436 million in revenue last year, Rocket Lab sees this contract as a huge opportunity. There's one problem, however: Rocket Lab has still not fully built the rocket that would be used on these missions. Named the Neutron, the medium-payload rocket system will be going through testing in 2025 and will hopefully start consistently launching for commercial customers within the next few years. Rocket Lab is banking not only money, but also time and reputation on the Neutron rocket. If the company can get a reliable Neutron rocket to market, it will open up opportunities to win money from this giant NSSL contract, among other potential deals with other partners, both governmental and private. An investor in Rocket Lab can get bogged down in the complications of this business, with the many different product lines, customer segments, and potential contracts to win. I think it is easiest to simplify things. One factor matters for Rocket Lab above all else: Getting a working Neutron rocket flying payloads for customers. At the end of the day, nothing else matters. SpaceX is the leading player in the sector by virtue of being the only player, meaning there is room for another space flight start-up to win some market share. If Rocket Lab builds and successfully launches the Neutron, the money will show up, likely pouring out from government and commercial contracts, as Rocket Lab will be one of two rocket launch companies to reliably and consistently launch payloads for commercial customers (SpaceX being the other one). Rocket Lab has proven it can win contracts with its small Electron rocket, and now the Neutron is the next step. If it keeps building its product pipeline, Rocket Lab could be well on its way to reaching SpaceX's reported $350 billion market valuation. For reference, Rocket Lab has a market cap of just $8 billion. On its trailing numbers, Rocket Lab stock looks overvalued. The stock has a market cap of $8 billion on $436 million in revenue, or a price-to-sales ratio (P/S) of 18.4. This is for a low-margin business that is currently unprofitable and capital-intensive. There is no way to argue that Rocket Lab stock is a buy based on its trailing financial figures. Long-term investing is all about making educated estimates about future performance. Rocket Lab has a path to 10x its revenue over the next decade while starting to generate healthy profits for shareholders. This is a high-risk bet, but also one with a high reward potential if things take off. So how should one invest in Rocket Lab? If you are attracted to this stock and want to buy it for your portfolio, make it a small position at cost. That way, if things go south, it doesn't destroy too much wealth. But if it works out and becomes the next SpaceX, it will become a bigger and bigger position in your portfolio over time. 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