Author Topic: Rocket Lab (RKLB) - Finally a decent space company that we can invest in?  (Read 30848 times)

Herbert Derp

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Re: Rocket Lab (RKLB) - Finally a decent space company that we can invest in?
« Reply #200 on: December 28, 2021, 03:47:28 PM »
Sorry to jump in here again, but this stat smelled off enough that I started running some back of the envelop numbers.

One million shares of rocketlab is worth $11M at current market prices.  If $11M is equal to ~1% of Harvard's portfolio that would mean Harvard University's total portfolio had a value of about $1.1B (11M/.01). However we know that Harvard University's endowment portfolio is actually valued at $53B so something is very off with the article you are quoting.

Turns out that those figures are just for the companies included in Harvard Management Company's latest 13F filing. As of 9/30/2021, Harvard Management Company reported that they had initiated a position of 1,000,000 shares of RKLB. The report was filed on 11/12/2021 and contains data up to 9/30/2021.

At the time of filing, Harvard Management Company's 13F portfolio was worth $1,706,340,000, and the Rocket Lab stake was worth $16.13MM, or 0.945% of the overall holdings.

So apparently, Harvard's $1.7B 13F portfolio is only a small subset of their overall portfolio of over $50B. As to the distinction between these two portfolios, I am not sure. It's still a big position in RKLB though!
« Last Edit: December 28, 2021, 03:50:52 PM by Herbert Derp »

BicycleB

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Re: Rocket Lab (RKLB) - Finally a decent space company that we can invest in?
« Reply #201 on: December 28, 2021, 04:18:23 PM »
Sorry to jump in here again, but this stat smelled off enough that I started running some back of the envelop numbers.

One million shares of rocketlab is worth $11M at current market prices.  If $11M is equal to ~1% of Harvard's portfolio that would mean Harvard University's total portfolio had a value of about $1.1B (11M/.01). However we know that Harvard University's endowment portfolio is actually valued at $53B so something is very off with the article you are quoting.

Turns out that those figures are just for the companies included in Harvard Management Company's latest 13F filing. As of 9/30/2021, Harvard Management Company reported that they had initiated a position of 1,000,000 shares of RKLB. The report was filed on 11/12/2021 and contains data up to 9/30/2021.

At the time of filing, Harvard Management Company's 13F portfolio was worth $1,706,340,000, and the Rocket Lab stake was worth $16.13MM, or 0.945% of the overall holdings.

So apparently, Harvard's $1.7B 13F portfolio is only a small subset of their overall portfolio of over $50B. As to the distinction between these two portfolios, I am not sure. It's still a big position in RKLB though!

That makes sense.

RKLB's valuation today is about 5.27B. So Harvard's stake is about .3% of market cap. A good example of institutional support, I guess?

Herbert Derp

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Re: Rocket Lab (RKLB) - Finally a decent space company that we can invest in?
« Reply #202 on: December 29, 2021, 07:17:53 PM »
Bad news for Astra today! Kerrisdale Capital published a short report today which paints a pretty damning picture of the company. To summarize, they say that launch demand simply isn't large enough for Astra to launch as many rockets as they claim. This jeopardizes Astra's entire business model, which only works if they can mass produce rockets and launch them at an extremely rapid cadence. Furthermore, they believe that Astra's plans to launch a constellation of satellites are half-baked, as the company has no credible ability to actually build satellites, let alone at scale, and the acquisition of Apollo Fusion doesn't make much sense.

None of the information in that report is really new information. They say a lot of the same negative things that I've personally been saying about the company, which is why I sold off half of my Astra holdings and moved them into Rocket Lab after the Neutron announcement. Now I just need to decide when and if I should dump the other half of my shares.

See here for another insightful topic on how companies like Virgin Orbit and Astra are painting an overly optimistic, perhaps even delusional picture of how they can grow their launch revenue over the next 5-10 years in their investor presentations. Rocket Lab also has optimistic projections for launch revenue, but their projections are less optimistic than Virgin Orbit and Astra. Most importantly, Rocket Lab acknowledges that launch is not where the real revenue is in the space industry, and are making very credible moves to diversify their business away from launch and into space systems and space services.

Here is a quick comparison of the investor presentations for Rocket Lab, Astra, and Virgin Orbit:

Rocket Lab Revenue Projections
2021: $69MM ($49MM launch, $20MM space systems)
2022: $176MM ($115MM launch, $61MM space systems)
2023: $267MM ($141MM launch, $126MM space systems)
2024: $450MM ($232MM launch, $218MM space systems)
2025: $749MM ($399MM launch, $350MM space systems)

Astra Revenue Projections
2021: $4MM ($4MM launch, $0MM space systems, 3 launches)
2022: $67MM ($47MM launch, $21MM space systems, 15 launches)
2023: $256MM ($206MM launch, $49MM space systems, 55 launches)
2024: $780MM ($619MM launch, $161MM space systems, 165 launches)
2025: $1.501B ($1.125B launch, $376MM space systems, 300 launches)

Virgin Orbit Revenue Projections
2021: $15MM ($15MM launch, $0MM space systems)
2022: $70MM ($70MM launch, $0MM space systems)
2023: $331MM ($321MM launch, $10MM space systems)
2024: $914MM ($765MM launch, $148MM space systems)
2025: $1.554B ($1.24B launch, $314MM space systems)

As you can see, Astra and Virgin Orbit both claim that they can achieve triple the launch revenue and double the overall revenue of Rocket Lab in 2025. They also claim to be able to match Rocket Lab's space systems revenue by 2025 despite having no current space systems business and no clear plans to build one.

In my opinion, Rocket Lab's revenue projections are optimistic. Based on their Q3 earnings report, Rocket Lab has realized $34.8MM in 2021 revenue and is on track for a total of $58MM in revenue for the year--$11MM less than their original projections in the investor presentation. Astra and Virgin Orbit's revenue projections are downright delusional! Where on Earth is Astra going to find the demand to launch 55 rockets in 2023, let alone 165 in 2024 and 300 in 2025? Virgin Orbit is projecting nothing for space systems for years, until all of a sudden they will be on par with Rocket Lab in 2024? Nonsense! No wonder Peter Beck has such amusing body language (1:33 - 2:07) when Chris Kemp is talking about Astra's history and future plans.
« Last Edit: December 29, 2021, 08:33:57 PM by Herbert Derp »

BicycleB

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Re: Rocket Lab (RKLB) - Finally a decent space company that we can invest in?
« Reply #203 on: December 29, 2021, 08:28:21 PM »
watched only a fraction of the video (I read faster than I can view, rarely watch whole vids) - would love to know timecode of body language :)

Herbert Derp

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Re: Rocket Lab (RKLB) - Finally a decent space company that we can invest in?
« Reply #204 on: December 29, 2021, 08:37:52 PM »
watched only a fraction of the video (I read faster than I can view, rarely watch whole vids) - would love to know timecode of body language :)

Added the timecode. My video link pointed to the relevant part of the video, but I guess that isn't obvious. Peter Beck grins when Chris Kemp claims Astra only started four years ago (Ventions?), and he shakes his head when Kemp says Astra plans for daily launches and is working on an integrated satellite-spacecraft system.

BicycleB

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Re: Rocket Lab (RKLB) - Finally a decent space company that we can invest in?
« Reply #205 on: December 29, 2021, 09:00:47 PM »
Oh! I walked right past it while multitasking, my bad. Thanks for the quick reply.

On the bright side, I ended up listening /partly watching to a lot of the vid and learned a lot. Good discussion.

Herbert Derp

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Re: Rocket Lab (RKLB) - Finally a decent space company that we can invest in?
« Reply #206 on: December 29, 2021, 09:05:33 PM »
Glad you liked the video. If you want to watch another video, I would recommend listening to Peter Beck's interview with Scott Manley about Neutron. It's pretty informative, and shorter than the other Neutron videos.

Speaking of space systems, did you know that the James Webb Space Telescope uses Rocket Lab solar cells in its solar panels? Well, technically they are SolAero solar cells, but same difference. It's the 1,002nd satellite to incorporate SolAero solar cells. I'm curious to see how much space systems revenue Rocket Lab can get from this line of business!

Herbert Derp

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Re: Rocket Lab (RKLB) - Finally a decent space company that we can invest in?
« Reply #207 on: December 30, 2021, 05:51:47 PM »
Let's take another look at Rocket Lab's revenue projections:

Rocket Lab Revenue Projections
2021: $69MM ($49MM launch, $20MM space systems)
2022: $176MM ($115MM launch, $61MM space systems)
2023: $267MM ($141MM launch, $126MM space systems)
2024: $450MM ($232MM launch, $218MM space systems)
2025: $749MM ($399MM launch, $350MM space systems)

Astra Revenue Projections
2021: $4MM ($4MM launch, $0MM space systems, 3 launches)
2022: $67MM ($47MM launch, $21MM space systems, 15 launches)
2023: $256MM ($206MM launch, $49MM space systems, 55 launches)
2024: $780MM ($619MM launch, $161MM space systems, 165 launches)
2025: $1.501B ($1.125B launch, $376MM space systems, 300 launches)

Virgin Orbit Revenue Projections
2021: $15MM ($15MM launch, $0MM space systems)
2022: $70MM ($70MM launch, $0MM space systems)
2023: $331MM ($321MM launch, $10MM space systems)
2024: $914MM ($765MM launch, $148MM space systems)
2025: $1.554B ($1.24B launch, $314MM space systems)

One of the biggest ways that we will be able to measure the performance of these companies is if they can keep up with these revenue projections. As I mentioned in the previous post, Rocket Lab has realized $34.8MM in 2021 revenue and is on track for a total of $58MM in revenue for the year--$11MM less than their original projections in the investor presentation.

However, things look better for 2022. Yahoo Finance has average analyst 2022 revenue estimate at $209.33MM. That's actually higher than what Rocket Lab themselves put in their own projections. Also, Rocket Lab is adding a lot of additional revenue through acquisitions. SolAero alone could add another $80MM / year of revenue. That being said, the fact that Rocket Lab was able to buy them for just $80MM means SolAero must not be very profitable.

In any case, the odds look really good that Rocket Lab is going to be able to more than triple their revenue from 2021 to 2022! If we compare Astra's and Virgin Orbit's extremely optimistic revenue projections to that, we'll see that in 2022 they will still be far behind Rocket Lab in terms of revenue:

Rocket Lab Revenue Projections
2022: $176MM ($115MM launch, $61MM space systems)
2023: $267MM ($141MM launch, $126MM space systems)

Astra Revenue Projections
2022: $67MM ($47MM launch, $21MM space systems, 15 launches)
2023: $256MM ($206MM launch, $49MM space systems, 55 launches)

Virgin Orbit Revenue Projections
2022: $70MM ($70MM launch, $0MM space systems)
2023: $331MM ($321MM launch, $10MM space systems)

But yet, somehow, they are planning on going from far behind Rocket Lab in 2022 to matching or surpassing them in 2023! And it's not just that, but they are estimating a much higher proportion of 2023 revenue from launch. How? Where is all this extra launch revenue in 2023 even coming from? And if all this 2023 launch demand does magically materialize, Rocket Lab should end up doing much better than they originally estimated, since they are relying much more on space systems to hit their revenue targets.

In conclusion, Rocket Lab seems to have a clear path to hitting their 2022 revenue projections, and their 2023 revenue projections are not massively higher than that--a 50% increase. In comparison, Astra and Virgin Orbit are projecting 282% and 373% revenue increases from 2022 to 2023, with the vast majority of that increase accounted for by launch. I strongly suspect that this launch revenue may simply never materialize, and Rocket Lab's revenue will remain far ahead of Astra and Virgin Orbit into 2023 and beyond. Rocket Lab is absolutely doing the right thing by focusing strongly on their space systems business rather than putting all of their eggs into the launch business.
« Last Edit: January 19, 2022, 03:50:21 PM by Herbert Derp »

Herbert Derp

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Re: Rocket Lab (RKLB) - Finally a decent space company that we can invest in?
« Reply #208 on: January 12, 2022, 06:44:52 PM »
Rocket Lab just got a new $17 price target and "overweight" rating from Morgan Stanley! This is the lowest price target so far, but still high above the current price. Also, the $17 per share is the base case. Morgan Stanley's bull case is a whopping $40 per share!

https://seekingalpha.com/news/3787461-rocket-lab-usa-rallies-with-morgan-stanley-bullish-on-space-race-potential

The price targets are now:

09/09/2021, Canaccord Genuity, Price Target: $30

09/13/2021, Cowen, Price Target: $18

09/17/2021, Deutsche Bank, Price Target: $18

09/30/2021, Stifel, Price Target: $22

11/30/2021, Bank of America, Price Target: $20

01/12/2022, Morgan Stanley, Price Target: $17

You can also view a live summary of the analyst ratings here:
https://www.benzinga.com/quote/RKLB/analyst-ratings
« Last Edit: February 23, 2022, 01:57:20 PM by Herbert Derp »

alcon835

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Re: Rocket Lab (RKLB) - Finally a decent space company that we can invest in?
« Reply #209 on: January 14, 2022, 01:13:15 PM »
I'm pretty eager for that 10-k

alcon835

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Re: Rocket Lab (RKLB) - Finally a decent space company that we can invest in?
« Reply #210 on: January 19, 2022, 08:38:29 AM »
I took a loss for it, but I'm extremely glad I sold off my ASTR. I realize this may be a temporary dip as all of space is taking a bit of a hit right now, but I simply do not trust Chris to achieve any of the goals his company sets out. To date, they appear to have never hit a deadline.

As long as they keep stacking the deck, providing misleading presentations, and failing to make any progress on profitability, I don't see a reason to invest in to them. They are going to need more cash before they start generating revenue and I'm not planning on paying for more lies and mistakes.

Herbert Derp

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Re: Rocket Lab (RKLB) - Finally a decent space company that we can invest in?
« Reply #211 on: January 21, 2022, 12:01:08 AM »
Tech stocks are getting clobbered these past few weeks, especially Rocket Lab and other space stocks. I still believe in Rocket Lab's business plan, nothing has really changed for the company.

Rocket Lab has announced the dates for their next two missions:
"Without Mission A Beat" (BlackSky) - Launch window opens 02/04/2022.
CAPSTONE (NASA Moon mission) - No earlier than 03/19/2022.

The only thing that worries me is that Rocket Lab has failed to launch anything in January 2022. They really need to be launching at least once a month on average to meet their revenue targets. Hoping that they can make up for the shortfall later this year. That being said, these launch delays are due to problems with the customers, not with Rocket Lab. Rocket Lab has contracts signed and rockets ready, but customers just can't get their payloads together soon enough!

It turns out space is hard. ABL Space Systems, one of Rocket Lab's competitors, was supposed to attempt their first launch early last year late last year early this year, but now their rocket has exploded on the pad. This probably means even further delays.

Astra's next launch attempt is currently scheduled for this weekend from Cape Canaveral in Florida, although it will probably get delayed. Hoping it goes well for them!
« Last Edit: January 21, 2022, 11:35:16 AM by Herbert Derp »

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Re: Rocket Lab (RKLB) - Finally a decent space company that we can invest in?
« Reply #212 on: January 21, 2022, 09:56:25 AM »
Well, put some of my "stupid money" in to RKLB, at $9.30. But as usual my problem is I'm too timid, so only put in a few thousand that I would be ok loosing. So even if it goes up 5-10x it's not really a life-changing amount of money. My 5x googl stocks gave me the gains to buy a gently used Kia! ;D. Maybe I'll consider adding more RKLB in the future.

Herbert Derp

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Re: Rocket Lab (RKLB) - Finally a decent space company that we can invest in?
« Reply #213 on: January 21, 2022, 01:54:57 PM »
Welcome to the club. I think right now is a great buying opportunity for RKLB!

In somewhat recent news, Virgin Orbit, one of Rocket Lab's primary competitors, just had their third successful mission:
https://spacenews.com/virgin-orbit-launches-seven-cubesats-on-third-operational-mission/

However, things are not so rosy in the world of Virgin Orbit. Their SPAC was a disaster, raising less than half of the funds that they intended. They wanted to raise $483MM, instead they raised $228MM. This is because a massive amount of investors bailed on the SPAC, opting to get their $10/share back rather than own shares in the merged company. This is going to cause some significant financial pain for the company:
https://spacenews.com/virgin-orbit-raises-far-less-than-expected-from-spac-merger/

Perhaps opting for the SPAC route was not ideal for companies like Virgin Orbit and Astra. With their plummeting share prices, they are going to find it harder to raise the capital they need to stay alive--which may cause their stock prices to go down further. The good news is that Rocket Lab has enough cash to survive for quite a while without additional capital raises. Can't say the same for Virgin Orbit and Astra.
« Last Edit: January 21, 2022, 07:13:39 PM by Herbert Derp »

oldladystache

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Re: Rocket Lab (RKLB) - Finally a decent space company that we can invest in?
« Reply #214 on: January 21, 2022, 06:58:39 PM »
I bought some at 14, then I bought some more at 9.9 - I hope you are right.

Herbert Derp

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Re: Rocket Lab (RKLB) - Finally a decent space company that we can invest in?
« Reply #215 on: February 06, 2022, 09:22:48 PM »
Good news! Rocket Lab is opening a new space systems complex in Littleton, Colorado, near the current offices of Advanced Solutions, Inc. The new complex will have 40,000 square feet of office, lab and production space, and will include two mission operations centers. It will allow Advanced Solutionsí staff to double to more than 120 people by early 2023.

Growing space systems is more important to Rocket Lab's future than launch, in my opinion. The market for space systems and space services is much bigger than launch, and aggressively expanding out of launch is the only way Rocket Lab is going to get a slice of the true profits in the future space industry.

This is another opportunity to compare Rocket Lab and Astra, by the way. Both companies say they want to expand into space systems and space services, but only Rocket Lab is making credible moves to get there. So far, Astra has been almost nothing but talk.

https://spacenews.com/rocket-lab-expands-colorado-facilities-prepares-for-busy-launch-year/
« Last Edit: February 08, 2022, 10:56:20 PM by Herbert Derp »

alcon835

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Re: Rocket Lab (RKLB) - Finally a decent space company that we can invest in?
« Reply #216 on: February 07, 2022, 07:09:46 AM »
With everything Rocket Lab is doing, the companies they are buying, the diversification of their business, and the space contracts they keep winning...

I just don't see how anyone isn't bullish on RKLB.

markbike528CBX

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Re: Rocket Lab (RKLB) - Finally a decent space company that we can invest in?
« Reply #217 on: February 08, 2022, 09:17:03 AM »
From the rocket side, a general discussion of sector stock picking.

Topic: Investment in space companies  (Read 8397 times)
https://forum.nasaspaceflight.com/index.php?topic=53937.40

MustacheAndaHalf

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Re: Rocket Lab (RKLB) - Finally a decent space company that we can invest in?
« Reply #218 on: February 08, 2022, 09:26:18 AM »
With everything Rocket Lab is doing, the companies they are buying, the diversification of their business, and the space contracts they keep winning...

I just don't see how anyone isn't bullish on RKLB.
Last month 5 analysts covered RKLB, with 3 giving it a "strong buy" (versus 1 buy and 1 hold).  Seems like analysts agreed with you.

One counter-argument: recent returns, like -22% YTD.  High growth stocks may be up against a tough year.
https://www.morningstar.com/stocks/xnas/rklb/trailing-returns

Herbert Derp

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Re: Rocket Lab (RKLB) - Finally a decent space company that we can invest in?
« Reply #219 on: February 10, 2022, 01:44:53 PM »
Astra's launch today has failed. Four customer satellites were lost. Their stock is down 32% so far today. Bad news for Astra. Good news for Rocket Lab, prospective customers are going to be looking for a launch provider with reliable rockets, which Rocket Lab has and Astra doesn't.

Rocket Lab's upcoming mission, "Without Mission a Beat", which was scheduled for February 14th, has apparently missed a beat after all and been pushed back into March. In response, Rocket Lab has pulled forward a different mission ("The Owlís Night Continues") to February 28th. That's really cutting it close. At this point, it seems likely that Rocket Lab will fail to launch anything for both January and February. Again, space is hard.

Some good news is that last month, NASA released their "Autonomous Flight Termination Unit" software to Rocket Lab. This is one of the final steps towards enabling Rocket Lab to launch from Virginia and increase their launch cadence.
« Last Edit: February 10, 2022, 02:38:30 PM by Herbert Derp »

vand

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Re: Rocket Lab (RKLB) - Finally a decent space company that we can invest in?
« Reply #220 on: February 14, 2022, 06:32:46 PM »
Rocket Lab just got a new $20 price target and buy rating from Bank of America!

https://www.barrons.com/articles/rocket-lab-stock-buy-rating-51638287031

Hopefully this means that institutional interest in the stock is growing.

The price targets are now:

09/09/2021, Canaccord Genuity, Price Target: $30

09/13/2021, Cowen, Price Target: $18

09/17/2021, Deutsche Bank, Price Target: $18

09/30/2021, Stifel, Price Target: $22

11/30/2021, Bank of America, Price Target: $20

You can also view a live summary of the analyst ratings here:
https://www.benzinga.com/quote/RKLB/analyst-ratings

So far not a single one of these brokers has even got the direction right, never mind the size.

OK, maybe that's a bit uncalled for. But be very careful. Most of this board is dyed in the wool indexers, with a small number of active stock picker trying to literally find the next rocketship. Maybe there's room for something healthily in the middle, like, I dunno, insurance companies.

Herbert Derp

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Re: Rocket Lab (RKLB) - Finally a decent space company that we can invest in?
« Reply #221 on: February 23, 2022, 01:56:57 PM »
Rocket Lab just got a new $20 price target and buy rating from Roth Capital! I couldn't find much info other than the price target itself, but it shows that analysts are still confident in Rocket Lab despite the recent downturn in space stocks. Personally, I think this downturn is a great buying opportunity.

In other news, Rocket Lab's second operational launch pad is officially open for business, with their next mission scheduled to launch from it in about a week! Check out this video which Rocket Lab put out today to commemorate their new launch pad.

Technically, this is Rocket Lab's third launch pad, as their launch pad in Virginia was completed all the way back in 2019. However, they are still not certified to fly from Virginia due to regulatory issues. This certification process has been in progress for years. It seems like NASA didn't like Rocket Lab's Autonomous Flight Termination System which was ready in 2019, so they spent years either modifying it or creating their own version. Overall, the AFTS project appears to be a dumpster fire, but I guess it's par for the course when you have a complex collaborative software project between a private corporation and a government entity. The second Rocket Lab finally gets certified to launch from Virginia, you'll hear about it here!

As you can see, Rocket Lab currently has two rockets on the pad and ready to go at their launch facility in New Zealand!


The price targets are now:

09/09/2021, Canaccord Genuity, Price Target: $30

09/13/2021, Cowen, Price Target: $18

09/17/2021, Deutsche Bank, Price Target: $18

09/30/2021, Stifel, Price Target: $22

11/30/2021, Bank of America, Price Target: $20

01/12/2022, Morgan Stanley, Price Target: $17

02/23/2022, Roth Capital, Price Target: $20

You can also view a live summary of the analyst ratings here:
https://www.benzinga.com/quote/RKLB/analyst-ratings
« Last Edit: February 24, 2022, 05:25:38 PM by Herbert Derp »

Herbert Derp

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Re: Rocket Lab (RKLB) - Finally a decent space company that we can invest in?
« Reply #222 on: February 24, 2022, 04:01:14 PM »
More big news for Rocket Lab today!

Rocket Lab just signed a new $143M space systems contract to build a fleet of 17 satellite buses for a satellite communications company called Globalstar. Rocket Lab is actually being subcontracted by a company called MDA as part of a larger $327M contract for MDA to manufacture Globalstarís satellites, lead the development of the payload, and perform the final satellite assembly, integration, and testing. Apparently, this $327M fleet of satellites is 95% funded by a "mystery customer" of Globalstar (speculated to be Apple) who wants to provide satellite internet for smartphones. The total initial contract value for Rocket Lab is $143M, with options to provide the satellite operations control center, launch dispensers, launch integration, and up to nine additional spacecraft with flexibility in timing to order such spacecraft.

All 17 of the 500kg spacecraft will be designed and manufactured at Rocket Labís Long Beach production complex and headquarters, where a new high-volume spacecraft manufacturing line is being developed to support growing customer demand for Rocket Lab satellites. Leveraging Rocket Labís vertically integrated space systems capabilities, the satellites will feature components and subsystems produced by Rocket Labís recently acquired companies including solar panels and structures from SolAero Technologies in Albuquerque, New Mexico, software from ASI by Rocket Lab in Denver, Colorado, and reaction wheels from Sinclair Interplanetary in Toronto, Canada. The telemetry and control radio for all spacecraft will also be a C-band variant of Rocket Labís Frontier Satellite Radio (Frontier-C).

As I've said previously, the market for space systems and space services is much bigger than launch, and aggressively expanding out of launch is the only way Rocket Lab is going to get a slice of the true profits in the future space industry. This contract shows that Rocket Lab is making great progress on this front! Although these satellite busses are going to be manufactured at Rocket Lab's facility in Long Beach, California, the fact that Rocket Lab is building out a whole new 40,000 square foot space systems facility in Colorado shows that they expect much more of these contracts in the future!

This contract is huge, and is strong evidence that Rocket Lab's business model is gaining traction. No wonder their stock is up 14.6% today despite the dark shadow cast on the stock market by the rapid escalation of the conflict in Ukraine.

In the future, I'd like to see Rocket Lab cut out the middleman and do more of what MDA is doing--and I do think that Rocket Lab is heading in that direction. As they gain experience from contracts such as this, I expect Rocket Lab to start offering more and more services in-house as they march towards their goal of becoming an end-to-end space company that provides turnkey solutions to customers. Keep in mind that the total value of the Globalstar contract was a whopping $327M, of which Rocket Lab was able to capture $143M. Rocket Lab has a clear path to being able to capture an even larger slice of these pies in the future.

Finally, I'd like to bring up one of my old posts about the kind of satellite constellations that Rocket Lab will be working with. There are a multitude of small space companies trying to build small constellations of less than 100 satellites. Globalstar is a prime example of one such company. Rocket Lab is positioning themselves to not just launch these constellations with Neutron, but to build them as well!

That being said, most commercial constellations do not seem to be as large as Starlink and the handful of other proposed global satellite internet constellations. Also, their satellites are smaller. For example, the well known Earth imaging company BlackSky plans to operate a constellation of only 60 satellites in the long term. This is all they think they need to get full coverage of the Earthís surface. Spire Global, another similar company, operates a fleet of about 110 satellites, and these are tiny CubeSats the size of a loaf of bread.

Furthermore, as I mentioned in a previous post, there are a lot of smaller space companies who are trying to build out constellations of tens to hundreds of satellites. The long list of satellite constellation companies I mentioned in that post is just scratching the surface. What we have is a lot of different companies launching a lot of different small constellations to a lot of different orbits on a lot of different schedules. All of these constellations will need to be maintained in a piecemeal fashion over time, even the huge ones like Starlink.
« Last Edit: February 24, 2022, 05:06:46 PM by Herbert Derp »

alcon835

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Re: Rocket Lab (RKLB) - Finally a decent space company that we can invest in?
« Reply #223 on: February 26, 2022, 04:19:18 PM »
Big things are continuing to happen!!! It's so rewarding to be invested in a company that seems to be doing all the right things. This really feels like being on the ground floor of Costco or Walmart

MustacheAndaHalf

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Re: Rocket Lab (RKLB) - Finally a decent space company that we can invest in?
« Reply #224 on: February 26, 2022, 05:04:31 PM »
According to Yahoo Finance, the IPO price for Rocket Lab (RKLB) was $9.74 on Nov 25th, 2020.  So with the post-market jump (to $10.10/sh), it has a +3.7% return so far.  So the most pessimistic analyst expects +78% upside, with others expecting more.  Yahoo Finance shows 6 analysts: 3 strong buy, 2 buy, 1 neutral.  I suspect this company could beat the market over the next few years, but offers high volatility - it could be a fit for me.

I'm ignorant of rocket components, so bear with my estimates and questions.  They have a $143 million contract for 17 spacecraft busses, with the option for 9 more.  So if they do well, they could make $218 million worth of sales, and then take on additional responsibilities for the Globestar satellites.  How long will it take Rocket Lab to produce those 17 spacecraft busses?  1 or 2 years?

The company has $50 million in revenue, which sucks compared to their $4.5 billion market cap.  Yahoo shows N/A for price/sales, but I calculate it at 91.

I don't see a lot of space related ETFs, but "Procure Space ETF" has RKLB in it's top 10 holdings (barely) at 4% weight.  The other space ETF I have to ignore, since ARKX added "Deere & Company" which isn't launching tractors into space any day soon.  So... maybe Rocket Lab is one of the top 10 publicly traded space companies?
https://etfdb.com/etf/UFO/#holdings

I'm curious if others worked on a "bear/bull" case for Rocket Lab.  Under what conditions would they fail (the bear case), and how might they do even better than expected (the bull case)?

Herbert Derp

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Re: Rocket Lab (RKLB) - Finally a decent space company that we can invest in?
« Reply #225 on: February 27, 2022, 03:07:19 AM »
I'm ignorant of rocket components, so bear with my estimates and questions.  They have a $143 million contract for 17 spacecraft busses, with the option for 9 more.  So if they do well, they could make $218 million worth of sales, and then take on additional responsibilities for the Globestar satellites.  How long will it take Rocket Lab to produce those 17 spacecraft busses?  1 or 2 years?

The satellites are expected to launch by the end of 2025, however Rocket Lab should finish the satellite busses and hand them off to MDA long before that.

The company has $50 million in revenue, which sucks compared to their $4.5 billion market cap.  Yahoo shows N/A for price/sales, but I calculate it at 91.

Rocket Lab had ~$58M in revenue in 2021, however their revenue is growing at a rapid pace. Analysts are expecting $219M in revenue in 2022. This is actually higher than the $176M that Rocket Lab itself predicted in their investor presentation, although I think the "beat" is driven by acquisitions rather than organic revenue growth.

I'm curious if others worked on a "bear/bull" case for Rocket Lab.  Under what conditions would they fail (the bear case), and how might they do even better than expected (the bull case)?

Rocket Lab gave these revenue projections in their investor presentation:

Rocket Lab Revenue Projections
2021: $69M ($49M launch, $20M space systems)
2022: $176M ($115M launch, $61M space systems)
2023: $267M ($141M launch, $126M space systems)
2024: $450M ($232M launch, $218M space systems)
2025: $749M ($399M launch, $350M space systems)

From what I've seen, the $4.1B valuation that Rocket Lab priced their SPAC at is based on their projected 2025 revenues and profits. Here is a decent video explaining the valuation, I'll see if I can dig up better sources. In other words, much of these revenue projections are already priced into the stock. If Rocket Lab can beat them, expect the stock price to rise sharply. That being said, revenue growth from acquisitions won't be treated the same as organic revenue growth. If they only beat revenue projections because of acquisitions, although this won't be a negative, don't expect anything huge. On the other hand, if they fail to meet revenue projections, don't expect much from the stock at all. Finally, keep in mind that the current valuation of Rocket Lab is based on the 2025 projections. If Rocket Lab stays on track with their revenue projections, this means that revenue should continue to rise sharply after 2025, and the stock price, being forward-looking, should rise accordingly.

In other words, Rocket Labís valuation is based on their projected performance four years from now, in 2025. If time passes and Rocket Lab stays on track to meet their 2025 goals, the valuation will shift forward accordingly into 2026 projections or beyond. With Rocket Labís revenue projected to grow well in excess of 50% per year, this would translate into correspondingly high gains in share price.

So in my mind, the bull/bear cases are all about revenue growth. Rocket Lab will achieve the bull case if they meet or exceed their revenue growth projections, whereas the bear case will be realized if demand for their services fails to materialize and they fail to meet revenue projections. Are Rocket Lab's revenue projections realistic? Only time will tell, but they definitely seem more realistic than the numbers their competitors are throwing out.

So far, things look good. As I said earlier, analysts are expecting $219M in revenue in 2022, which is higher than the $176M in the investor presentation.

I want to stress how huge the Globalstar/MDA contract is. The $143M from just that single space systems contract accounts for 18.9% of Rocket Lab's $755M total projected space systems revenue from 2022 to 2025! In other words, they've already locked in a fifth of the space systems revenue that they need over the next four years from just that single contract. If Rocket Lab can land more contracts like that, they will be well on track to meet or even exceed revenue growth projections.

All that being said, Rocket Lab's Q4 2021 earnings call is scheduled for Monday, February 28th, less than two days from now! The critical thing to look for in that earnings call is the progress Rocket Lab is making towards growing their revenue. If they can stay on track, I will continue to expect great things from them in the future!
« Last Edit: February 27, 2022, 03:12:49 PM by Herbert Derp »

Herbert Derp

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Re: Rocket Lab (RKLB) - Finally a decent space company that we can invest in?
« Reply #226 on: February 27, 2022, 04:15:39 AM »
In other news, it recently came to light that Virgin Galactic is burning cash at an extreme rate--$1B in just two years! I think return on investment is a great way to tell good space companies from the bad, and Rocket Lab is galaxies ahead of both Virgin Galactic and Virgin Orbit in this regard.

Whereas Virgin Galactic burned through $1B over two years with only $3.5M in revenue to show for it, Rocket Lab burned through only $85M in two years while also realizing $83M in revenue. The difference in ROI is night and day!

On the orbital side, Virgin Orbit spent $1B to develop orbital capability, whereas Rocket Lab only spent $180M. This matters!

Analysts are worried that Virgin Galactic can scale their business to meet demand, because of all the inefficiencies and technical issues they've been having--a clear indicator of their horrible ROI. It's no wonder that the investor who took Virgin Galactic public dumped all his shares almost a year ago. When I first posted this topic, Rocket Lab's $4.1B market cap was 57% of Virgin Galactic's $7.16B, now Virgin Galactic's $2.37B market cap is only 56% of Rocket Lab's $4.24B. Meanwhile, Virgin Orbitís SPAC was a disaster, unlike Rocket Lab. The tables have turned!

The relative performance of these companies should not come as a surprise when you consider the background of their leadership. Prior to joining the company, Virgin Orbit's CEO spent his entire 34-year career at Boeing, an Old Space dinosaur with huge ROI problems of its own. Virgin Galactic's CEO was president of the Disneyland resort and is an MBA with no engineering background. In comparison, Rocket Lab's CEO was a child prodigy who built rocket engines in his backyard and went on to found Rocket Lab on his own without a college degree. In other words, it's no surprise that the child prodigy who cobbled together rocket engines from scrap in his backyard can achieve better ROI for his aerospace company than a career executive from a grossly inefficient, washed out company like Boeing, and the president of a theme park!

In conclusion, there are only a handful of other companies competing with or even operating in the same space as Rocket Lab, and Rocket Lab is comparing very favorably to almost all of them. In my opinion, Rocket Lab is shaping up to be one of the winners in the new space race.
« Last Edit: February 27, 2022, 02:54:48 PM by Herbert Derp »

MustacheAndaHalf

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Re: Rocket Lab (RKLB) - Finally a decent space company that we can invest in?
« Reply #227 on: February 27, 2022, 06:27:41 AM »
It seems like the "spacecraft bus" is the infrastructure that supports the satellite component systems.  I still don't know how long they take to design & produce, but it's a very significant part of the satellite.  That's an interesting vote of trust in Rocket Lab.

Looking at other stocks in the "Procure Space ETF", I see some cautionary tales.  The #1 holding is SES S.A. ("SESG") with +0% gain after 18 years, and a $3.9B market cap.  Viasat (VSAT) has done better with +8.8%/year for 26 years, but that still leaves you invested in a $3.2B company that doesn't beat the market.  Finally Iridium Communications (IRDM) comes in at 11%/yr for 14 years leaving it with a $5.0B market cap, which ties the market.  Portfolio Visualizer shows 1995-2021 had an 11.0%/year annualized return.

I've listened to most of the hour long interview, looked at company stats, and I believe the company will achieve things - but the stock price may or may not.  That's my biggest concern.

On the plus side, it offers incremental diversification from all my active picks - none of which are related to space exploration.  I'm currently leaning towards a half allocation this week, and another half before the next quarterly meeting.  I think many investors were disillusioned by all the space-related SPACs last year, and might have given up on the entire idea.  That would certainly explain analysts with their 2x and 3x targets not getting much attention.

The light composite materials that "make all the difference", like slowing your descent "with an umbrella versus holding a golf ball" are probably a novel advance.  As mentioned earlier, SpaceX uses 3 burns where Rocket Lab's spaceships use 2.  I hope they've filed patents on it!

Speaking of which, what are their top patents?  (Top meaning most significant for their products, and also most likely to pay off big if competitors imitate too closely).  Here's the list I found, which is difficult to understand for a layperson:
https://patents.justia.com/assignee/rocket-lab-usa-inc
« Last Edit: February 27, 2022, 06:29:46 AM by MustacheAndaHalf »

Herbert Derp

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Re: Rocket Lab (RKLB) - Finally a decent space company that we can invest in?
« Reply #228 on: February 27, 2022, 12:43:52 PM »
It seems like the "spacecraft bus" is the infrastructure that supports the satellite component systems.  I still don't know how long they take to design & produce, but it's a very significant part of the satellite.  That's an interesting vote of trust in Rocket Lab.

Yes, the satellite bus is essentially the entire satellite, minus certain proprietary bits and bobs installed by the customer. So think of it like Rocket Lab is designing and building the satellites and Globalstar is just installing their proprietary satellite internet broadcasting and receiving equipment onto them.

Speaking of which, what are their top patents?  (Top meaning most significant for their products, and also most likely to pay off big if competitors imitate too closely).  Here's the list I found, which is difficult to understand for a layperson:
https://patents.justia.com/assignee/rocket-lab-usa-inc

Oddly enough, patents arenít really a thing in the space industry. Competition is fierce among rival nations, and nobody wants to share their ideas to a rival nation by publishing patents.

AlanStache

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Re: Rocket Lab (RKLB) - Finally a decent space company that we can invest in?
« Reply #229 on: February 27, 2022, 12:45:55 PM »
It seems like the "spacecraft bus" is the infrastructure that supports the satellite component systems.  I still don't know how long they take to design & produce, but it's a very significant part of the satellite.  That's an interesting vote of trust in Rocket Lab.

Yes, the satellite bus is essentially the entire satellite, minus certain proprietary bits and bobs installed by the customer. So think of it like Rocket Lab is designing and building the satellites and Globalstar is just installing their proprietary satellite internet broadcasting and receiving equipment onto them.

Would it be wrong to think of the "spacecraft bus" as similar to an electric car "skateboard"?

Herbert Derp

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Re: Rocket Lab (RKLB) - Finally a decent space company that we can invest in?
« Reply #230 on: February 27, 2022, 01:07:12 PM »
It seems like the "spacecraft bus" is the infrastructure that supports the satellite component systems.  I still don't know how long they take to design & produce, but it's a very significant part of the satellite.  That's an interesting vote of trust in Rocket Lab.

Yes, the satellite bus is essentially the entire satellite, minus certain proprietary bits and bobs installed by the customer. So think of it like Rocket Lab is designing and building the satellites and Globalstar is just installing their proprietary satellite internet broadcasting and receiving equipment onto them.

Would it be wrong to think of the "spacecraft bus" as similar to an electric car "skateboard"?

That is a good comparison, but I think an even better one would be a PC tower. Rocket Lab’s vision of what a satellite bus should be is essentially a PC tower with solar panels, guidance and control systems, and a radio floating in space. They want to have a fully-functional, hardware and software platform that can be customized for customer use cases via plug-and-play peripherals. That being said, current satellite busses are more like EV skateboards in that integrating third party components is complex, costly, and time consuming.

Nevertheless, the eventual end goal is to have PC towers floating in space. Rocket Lab wants to build a platform that enables their customers to not have to worry about building satellites or managing satellites in orbit. Rocket Lab wants a future where customers only care about designing and building their custom sensors, broadcasting equipment, etc, and just plugging it in to Rocket Lab’s satellite bus. Rocket Lab will handle everything else, including launch, mission control, and orbital management. Much like how Amazon Web Services allows customers to build products on the Internet without worrying about Internet infrastructure, Rocket Lab’s platform will allow customers to build products in space without worrying about space infrastructure.
« Last Edit: February 27, 2022, 01:38:02 PM by Herbert Derp »

Herbert Derp

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Re: Rocket Lab (RKLB) - Finally a decent space company that we can invest in?
« Reply #231 on: February 28, 2022, 01:34:56 PM »
I am watching the live stream of today's Rocket Lab launch. Launch is just 3 minutes from now!
https://www.youtube.com/watch?v=MjfNJjTyfKY

There are ~16K people watching now, these streams are getting popular! In the past I remember Rocket Lab streams had less than 5K viewers.
« Last Edit: February 28, 2022, 01:46:56 PM by Herbert Derp »

Herbert Derp

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Re: Rocket Lab (RKLB) - Finally a decent space company that we can invest in?
« Reply #232 on: February 28, 2022, 01:51:13 PM »
The launch was a success! Also note that Rocket Lab's Q4 2021 earnings call is scheduled for just 40 minutes from now, at 1:30 PM PT / 4:30 PM ET. I'm hoping that the company will share some juicy details about future revenue growth!

Herbert Derp

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Re: Rocket Lab (RKLB) - Finally a decent space company that we can invest in?
« Reply #233 on: February 28, 2022, 04:09:35 PM »
The Q4 2021 earnings call is over. The financial results seem to be mildly positive and the stock is up slightly in after-hours trading. My key takeaways:

1. Revenue Growth

Rocket Lab's revenue grew 77% YoY from $35.2M in 2020 to $62.2M in 2021. Launch revenue grew 18% YoY, while space systems revenue grew by a whopping 1,464% YoY. The company posted a loss of $118M in 2021, up from $55M in 2020. They actually had a small profit of $2.8M in Q4 2021.

Revenue backlog growth is on track! Rocket Lab's revenue backlog grew from $82M in Q4 2020, to $183M in Q3 2021, to $241M in Q4 2021, to $545M today. This represents a 3x increase since Q3 2021 and a 2.3x increase since Q4 2021. Overall, Rocket Lab's revenue backlog grew by $463M or 6.5x since the start of 2021!

Putting things into perspective, these are the numbers that Rocket Lab needs to hit:

Rocket Lab Revenue Projections
2022: $176M ($115M launch, $61M space systems)
2023: $267M ($141M launch, $126M space systems)
2024: $450M ($232M launch, $218M space systems)
2025: $749M ($399M launch, $350M space systems)

Rocket Lab's revenue backlog growth of $463M since the start of 2021 accounts for 28% of the $1.642B of total revenue that they need to achieve over the next four years. So by that measure, they seem to have secured enough dollars in new contracts to be on track to meet their goals.

2. Launch Cadence

Rocket Lab said that they expect to achieve a consistent launch rate of one rocket per month by the end of 2022, and aim for two launches per month soon afterwards. They reiterated that launch delays are due to customer delays and that they are not production constrained. They have an inventory of multiple (3-7?) completed Electron rockets and plan to manufacture an additional 15 Electrons in 2022. Having more active launch pads will allow them to have parallel launch campaigns with more customers and hopefully fewer launch delays. They did not give a date for when their Electron launch pad at the Mid-Atlantic Regional Spaceport in Virginia will become operational. In my opinion, launch is the area where Rocket Lab has the greatest risk of missing revenue targets. I hope that the issue is just delayed schedules and not a true demand problem, but only time will tell.

3. Neutron Factory

Rocket Lab has officially selected a location within the Mid-Atlantic Regional Spaceport in Virginia, USA to build a 250,000 square foot facility to provide the manufacturing, assembly, integration, launch, and mission control for Neutron. As part of the deal, the state of Virginia is investing $45M: $30M for improvements to the Mid-Atlantic Regional Spaceport and $15M for the construction of Rocket Lab's facility. This money is significant considering that the total development cost of Neutron is estimated to be around $200M. Every dollar counts!

4. Acquisitions

Rocket Lab said that they are still looking to acquire additional companies but expect the rate of acquisitions to slow down significantly going forward. Of course, they did not give any hints as to what kinds of companies they are looking to acquire. Time will tell!
« Last Edit: March 01, 2022, 01:21:38 PM by Herbert Derp »

BicycleB

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Re: Rocket Lab (RKLB) - Finally a decent space company that we can invest in?
« Reply #234 on: February 28, 2022, 10:08:49 PM »
Nice summary, Derp.

Thinking about increasing my little stake.

AlanStache

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Any chance RL could move towards a "subscription" or "razor blade" type business model where the launch is discounted but they make money on building and/or babysitting the satellite? 

Herbert Derp

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In theory it could be possible if Rocket Lab can decrease launch costs enough. But currently, their business model relies too much on launch revenue for that to make sense.

MustacheAndaHalf

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Bought a half allocation of RKLB today at $9.39/share.  Half a day later, -2% ... or -99.9% annualized.  Just poking fun at it!  In a volatile market, drops are normal.

Quarterly report was 2/28, so expect another on 5/28.  I'd like to have a full allocation before mid-May, since the market might get excited weeks earlier.

My hopes for RKLB:
(1) I hope RKLB keeps a low correlation to cloud computing stocks (as represented by WCLD).
(2) I hope analyst & income projections are accurate, pushing the stock higher.
(3) Their novel approaches are valued by customers who need satellite launches

Fears for RKLB:
(a) acquisition, ending their growth prospects.  Typically the smaller company makes a big jump on this kind of news, but it also ends our journey.
(b) Rocket Lab follows in the footsteps of similar companies that underperformed the market and struggled to reach $5B market cap.

Herbert Derp

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Here is the best analysis of Rocket Lab stock post-earnings that I've seen so far:
https://www.youtube.com/watch?v=6w3BCx6R4Ts

Most of what they talk about was already brought up in this thread. Rocket Lab has enough cash on hand to sustain themselves for about 10 years, so running out of cash or going bankrupt isn't a concern. They also get fed a lot of money by the US government.

The main issue with the stock price is that it is priced for almost flawless execution according to Rocket Lab's 2025 revenue growth plan. However, the biggest growth year is 2022. After that, the growth rate slows down and there will be much less execution risk. In other words, it is absolutely critical for the stock price that Rocket Lab meets their 2022 growth projections which call for them to grow revenue from $62.2M in 2021 to $176M in 2022. If they can meet this extremely aggressive goal, expect to be rewarded. If they fail to meet that goal, the stock price probably isn't going anywhere, although the company itself doesn't face any risk of bankruptcy.

In other news, Rocket Lab has apparently increased the performance of their Rutherford engines on the Electron by 5%. This shows that they are continuing to innovate with engine technology, and is a positive thing to consider since they are developing a new engine for Neutron. If they can increase the performance of Neutron over time, it will enable them to unlock a lot of additional capabilities, such as doing more varieties of RTLS missions. That being said, it seems that they achieved this performance gain by upgrading the engine's batteries. Neutron will use a different kind of engine without batteries, so this exact innovation is not applicable there.
« Last Edit: March 07, 2022, 05:17:59 PM by Herbert Derp »

BicycleB

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For better or worse, bought another block of RKLB.

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Interesting topic - posting to follow.

Herbert Derp

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Good news! We have another vote of confidence in Rocket Lab. After the earnings call last week, the investment banking firm Stifel has maintained their buy rating on Rocket Lab and raised their price target to $23!

« Last Edit: March 07, 2022, 06:07:54 PM by Herbert Derp »

Herbert Derp

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Rocket Lab frequently mentions that they try to acquire companies that have "best in class" technology. Yesterday, we saw a good example of this. Rocket Lab announced that SolAero has developed a new space solar cell that has the highest efficiency of any commercial space solar cell globally (33%) and is 40% lighter than "typical space grade solar cells".

I don't think this means much for Rocket Lab's near-term prospects but it is good to see that they are innovating across so many areas.
« Last Edit: March 09, 2022, 06:30:52 PM by Herbert Derp »

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I am normally an index fund guy but have a small portion of my portfolio in individual stock.

Bought a little Rocket Lab today.

I see it as a small, long term bet with growth potential and if it doesn't pay off I'll be ok.

Herbert Derp

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Good luck!

Morgan Stanley gave the stock another vote of confidence today, reiterating their buy rating. They seem to be happy that Rocket Lab's order backlog has more than doubled in just two months, and are looking forward to the upcoming helicopter recovery mission.


Herbert Derp

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Good news for Astra today, their launch today was a success and they finally launched their first three satellites into orbit. Rocket Lab stock is down on this news.

In other good news, congress' 2022 defense spending bill is pumping a lot of money into the space industry--$1.3B more than what the Biden administration requested. Notably, this includes $70M for small launch providers like Rocket Lab and Astra, $50M of which is for a new program called "Tactically Responsive Launch" which sounds like it would be a boon for Astra. See my previous post for an explanation of why Astra is important to the US military and why they would be a major beneficiary of something called Tactically Responsive Launch.

Also of note, the defense spending bill includes $550M for a constellation of at least 28 satellites to track hypersonic missiles. This $550M is just a "down payment", and the total cost of the constellation is estimated to be $2.5B. The first eight satellites of the constellation have already been ordered and are scheduled to launch in 2023, four from L3Harris and four from a SpaceX-Leidos team. The Department of Defense is expected to release a solicitation for the next batch of 28 tracking satellites in the next one to two weeks. Two vendors are likely to be selected to supply 14 satellites each. The first 14 would launch in 2024 and the second half in 2025. If Rocket Lab could somehow win part of this contract, it would be huge for them! The DoD is trying to diversify away from traditional defense contractors like L3Harris and Leidos and source more of their space technology from commercial companies like SpaceX and Rocket Lab. However, I would still put my odds on one of the three companies involved in manufacturing the first eight satellites to win the contract for the next batch of satellites. Nevertheless, this contract is huge and something to keep an eye on, and is a great example of how much money is being invested in building out satellite constellations in the near future.

Finally, I think this spending bill really helps to illustrate where the money is. The DoD is investing $70M into small launch providers but $2.5B for a constellation of 28 satellites. It seems clear that there is more money to be made manufacturing and operating satellites than building rockets.
« Last Edit: March 15, 2022, 03:08:52 PM by Herbert Derp »

MustacheAndaHalf

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Finally, I think this spending bill really helps to illustrate where the money is. The DoD is investing $70M into small launch providers but $2.5B for a constellation of 28 satellites. It seems clear that there is more money to be made manufacturing and operating satellites than building rockets.
RLKB -7% yesterday but up +1% in very early pre-market.

Correct me where I'm wrong, here: Space Lab has built generations of rockets (Electron, Neutron, etc).  I assume that's much more expensive than design & construction of satellites.  Their name has "rocket" in it, too.  So are they focusing on the less profitable opportunity, rather than the more profitable design & construction of satellites?  Or can they juggle both in some optimal manner?

Herbert Derp

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RLKB -7% yesterday but up +1% in very early pre-market.

Correct me where I'm wrong, here: Rocket Lab has built generations of rockets (Electron, Neutron, etc).  I assume that's much more expensive than design & construction of satellites.  Their name has "rocket" in it, too.  So are they focusing on the less profitable opportunity, rather than the more profitable design & construction of satellites?  Or can they juggle both in some optimal manner?

Rocket Lab is expanding aggressively into satellites because space systems (satellites) and space services (services provided by satellites) are more profitable than launch. In the future, Rocket Lab plans to manufacture, launch, own, and operate their own constellation of satellites, much like SpaceX and Starlink. By acting as their own launch provider, Rocket Lab will have a huge vertical integration advantage in terms of launching, building, and operating their own satellite constellation. Peter Beck has said as much. Rocket Lab will have much cheaper costs compared to competitors who hire others to manufacture and launch their satellites, plus they will have a much easier time with scheduling and payload integration.

Rocket Lab can build both rockets and satellites in a synergistic manner. The electronics, communication systems, orbital telemetry, etc are very similar, and building and operating rockets and satellites requires similar skillsets. A rocket's second stage is practically a satellite, and Rocket Lab's third stage (kick stage) literally is a satellite.
« Last Edit: March 15, 2022, 11:35:05 PM by Herbert Derp »

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Looking at a list of the hottest space companies for 2020 makes me nervous.  For example, Telesat (TSAT) went public in 2006 at about $27/share.  Over 15 years later, TSAT is $19.61/share, -28% over 15 years.  As a pure play into satellite operations, they don't seem to have done much... and they are actually over 50 years old, but public for ~15.

It's possible Telesat has a limited mission in a limited market: satellite TV for Canada.  Compare that to RocketLab in the U.S., which launches, builds and possibly operates satellites.  Much larger scope in a much larger market... so if TV viewing in Canada is worth $1 billion, RKLB could have a much larger market cap in the U.S.

It's also a trend I see a bit too often: space related company IPO'ed over a decade ago and has gone nowhere.  And we had a rash of space-related companies in the past couple years - many fueled by the SPAC (special purpose acquisition company) frenzy.  I suppose a better approach would be to go through space companies that went public in the past couple years, and see how each compares to Rocket Lab.  A frenzy is still a good time to collect funding from the public markets.

I thought about buying more shares today, but RKLB is now up about +3% in the pre-market.  I'll wait for another day.

Herbert Derp

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Looking at a list of the hottest space companies for 2020 makes me nervous.  For example, Telesat (TSAT) went public in 2006 at about $27/share.  Over 15 years later, TSAT is $19.61/share, -28% over 15 years.  As a pure play into satellite operations, they don't seem to have done much... and they are actually over 50 years old, but public for ~15.

It's also a trend I see a bit too often: space related company IPO'ed over a decade ago and has gone nowhere. And we had a rash of space-related companies in the past couple years - many fueled by the SPAC (special purpose acquisition company) frenzy.

I donít think we should be comparing New Space companies like Rocket Lab to legacy Old Space companies from decades ago. Over the past decade or so, costs have been dropping rapidly and innovation in space technology is exploding. Modern computer-aided design tools allow engineers to design and build complex physical machines almost as easily as software engineers can write code. For example, with modern technology, engineers can design a product on a computer, run extremely realistic simulations on the product, and iterate on the design without ever building anything physicalóand when it does become time to build something physical, we have tools like 3D printers that allow for extremely rapid prototyping. These advances in technology allow engineers to do more with less, allowing for greater vertical integration, rapid iteration, and lower costs across the board.

None of this was possible decades ago. Computer-aided design was clunky and slow to use and engineers were still designing things on drafting paper. Realistic computer simulations were slow to orchestrate, extremely expensive, and frequently impractical or not possible at all. 3D printers did not exist. Aerospace engineers used to have to draft their designs on a piece of paper, build a prototype, and put it into a wind tunnel to determine the performance characteristics. This process could take weeks. With today's cutting-edge technology, all they need to do is click a button on their CAD software and the software will realistically simulate a virtual wind tunnel and output the performance characteristics in a matter of minutes. Soon, we will have AI to optimize these performance characteristics and engineers will be able to do even more. The 2020ís are truly a whole new ball game for space.

The issue with Old Space companies versus New Space companies is that the Old Space companies were built prior to the adoption of all these new technologies that make New Space companies so productive and agile. Old Space companies have old engineers who struggle to understand and adopt new technology, and their company culture is built around old technologies and old methodologies such as hiring subcontractors to do work that could be vertically integrated thanks to new technology, or the "waterfall model" which worked well in the past but is now obsolete compared to agile development and rapid iteration.

The prime example of the failings of Old Space is the Space Launch System (SLS) project led by NASA and Boeing. The project is billions of dollars over budget and almost four years behind schedule. A single launch of the SLS rocket is currently estimated to cost $4.1B, whereas a SpaceX Falcon 9 rocket only costs $50M. Earlier this month, NASA's Inspector General had some choice words about the project:
Quote
We found that the first four Artemis missions will each cost $4.1 billion per launch, a price tag that strikes us as unsustainable. We did see very poor contractor performance on Boeingís part ó poor planning and poor execution. We saw that the cost-plus contracts that NASA had been using to develop that combined SLS and Orion system work to the contractors rather than NASAís advantage, and for NASAís part we saw poor project management and contract oversight.

That being said, you raise a good point about the recent influx of new space companies in the last few years. Obviously, not all of these companies are going to be successful. As investors, we need to pay special attention to what these companies are doing rather than what they are saying. We need find companies who achieve actual results, show demonstrable progress, and successfully commercialize their technology. Many of these new space companies do not fit this bill.
« Last Edit: March 16, 2022, 02:46:30 PM by Herbert Derp »