Author Topic: Rocket Lab (RKLB) - Finally a decent space company that we can invest in?  (Read 35157 times)

Herbert Derp

  • Pencil Stache
  • ****
  • Posts: 766
  • Age: 31
  • Location: United States
Unfortunately, the CAPSTONE mission isnít going to send Rocket Labís share price to the moon. The mission is cool but it doesnít demonstrate any new capabilities. I think the only things that will boost Rocket Labís share price are broader market activity, another big contract like Globalstar, or significant progress on Neutron. At this point, it may be safe to say that those of us who invested early in Rocket Lab were too early!

In other news, Astra seems to be making progress with their Rocket 4.0, which will have similar performance to Electron at a cost of $4M per launch whereas Electron costs about $7M per launch. However, I would expect Electron to be reusable by the time Rocket 4.0 takes flight, which should keep Electron competitive. Astra also has plans to launch from the UK, which demonstrates the mobility of their launch system.

Overall, this is encouraging news, but I still wouldnít rate Astra as a buy right now since their revenue is so dependent on launch, which seems to have a demand problem. Astraís new rocket is cool, but itís only going to work out for them if demand increases vastly beyond current levels.

https://spacenews.com/astra-reveals-details-of-next-larger-rocket/

https://spacenews.com/astra-to-launch-from-u-k-spaceport/
« Last Edit: May 20, 2022, 03:32:33 PM by Herbert Derp »

MustacheAndaHalf

  • Walrus Stache
  • *******
  • Posts: 5195
Herbert Derp - I appreciated your analysis earlier, but I predicted bad markets ahead when I sold RKLB at $8/share.  I was right, and RKLB is $5/share.  I expect it to hit $3/share within 1 to 12 months.

Look at RKLB since Thanksgiving, down 67%.  Amazon down 40%!   The market's beliefs should be shattered on June 11 when inflation data comes out, but markets can maintain denial for months.

Earlier this week I sold off all individual stocks for reasons completely unrelated to Rocket Lab.  But Rocket Lab was part of that sell off, which you can read about in the journal area of the forum, if anyone is curious.

I sold RKLB somewhere near $8/share, and everyone else can get out just under $5/share right now.  This past week Walmart announced earnings, and their stock dropped more in one day than any day in the past 40 years.  Target followed, the stock lost 1/4th of it's value in a day.  Consumer spending is critical to the U.S. economy, and two of the biggest, well-run retail stores just took historic losses.  Look at the data - this does not end well.

JenniferW

  • Handlebar Stache
  • *****
  • Posts: 1166
This past week Walmart announced earnings, and their stock dropped more in one day than any day in the past 40 years.  Target followed, the stock lost 1/4th of it's value in a day.  Consumer spending is critical to the U.S. economy, and two of the biggest, well-run retail stores just took historic losses.  Look at the data - this does not end well.

Yeah and we've had seven weeks of losses in the S&P 500 which hasn't happened since March 2021 -- i.e. seven consecutive red weekly candles on stock charts.  The dow has had 8 consecutive red weekly candles, which hasn't happened since 1923.

I know I'm timing the market, but I am going to wait until there is a strong weekly green candle before buying some more VTI.  The market must prove itself before I invest.  It also must have a follow through day where the candle is above the 21 day moving average.

alcon835

  • Pencil Stache
  • ****
  • Posts: 542
Or....and this is CRAZY, I know. If you have a long-term view of RKLB (10+ year horizon), you can keep accumulating throughout this recession and reap the rewards in 5+ years.

JenniferW

  • Handlebar Stache
  • *****
  • Posts: 1166
Or....and this is CRAZY, I know. If you have a long-term view of RKLB (10+ year horizon), you can keep accumulating throughout this recession and reap the rewards in 5+ years.

Is it true, the saying I believe it is, that only 1 out of 10 startups succeed?  Do I have the ratios right?  I can "hope" RKLB will go up but the market doesn't care what I want.  I rather just invest in VTI when the market is down because it always goes back up, guaranteed.

I might consider an actively managed position in RKLB after it decreases in price a bit, goes sideways for a while, starts getting record earnings, has some sort of disruptive innovative tech other competitor's don't have.  Then set a trailing stop loss accordingly.  If it gets to big enough I might set the trailing stop loss to be -20%.  I'll add to my position as it continues to grow.    (Basically a William O'Neil CANSLIM approach.)
« Last Edit: May 21, 2022, 09:29:08 AM by JenniferW »

Herbert Derp

  • Pencil Stache
  • ****
  • Posts: 766
  • Age: 31
  • Location: United States
I think Rocket Lab will make it through the recession just fine. They picked the perfect time to raise capital, and are now sitting on about $600M of cash. They can use this cash to weather the storm and develop their next generation technology like Neutron. Meanwhile, the recession will paralyze most of the competition because they wonít be able to raise capital like Rocket Lab did.
« Last Edit: May 23, 2022, 04:42:41 PM by Herbert Derp »

Herbert Derp

  • Pencil Stache
  • ****
  • Posts: 766
  • Age: 31
  • Location: United States
I sold RKLB somewhere near $8/share, and everyone else can get out just under $5/share right now.  This past week Walmart announced earnings, and their stock dropped more in one day than any day in the past 40 years.  Target followed, the stock lost 1/4th of it's value in a day.  Consumer spending is critical to the U.S. economy, and two of the biggest, well-run retail stores just took historic losses.  Look at the data - this does not end well.

I guess the way I see it, everything is going down right now. I may as well just ride the market through this dip the same way as last time.

MustacheAndaHalf

  • Walrus Stache
  • *******
  • Posts: 5195
I think Rocket Lab will make it through the recession just fine. They picked the perfect time to raise capital, and are now sitting on about $750M of cash. They can use this cash to weather the storm and develop their next generation technology like Neutron. Meanwhile, the recession will paralyze most of the competition because they wonít be able to raise capital like Rocket Lab did.
One big risk I see is Rocket Lab falls near $3/share, and then Elon Musk offers to buy the company for $4.20/share (Space X sold shares at $420/share, no surprise).  In that scenario, you could lose money even as Rocket Lab succeeds.

Could Rocket Lab be sitting on $600 million cash with $150 million debt, per Yahoo Finance?
https://finance.yahoo.com/quote/RKLB/key-statistics?p=RKLB

I looked at various competitors, and Rocket Lab's financials look better than any of them.  RKLB has more cash, and spends it more slowly.  You mentioned competitors being paralyzed - for some, maybe it's permanent.

I don't know if Yahoo Finance has the right data for Redwire, but it shows $6M cash on $90M in debts.  Then again, their quarterly report (from 10 days ago) mentions an arrangement for "enhanced liquidity", which sounds like they're in trouble.
https://finance.yahoo.com/quote/RDW/key-statistics?p=RDW
https://finance.yahoo.com/news/redwire-corporation-reports-first-quarter-200500497.html

Herbert Derp

  • Pencil Stache
  • ****
  • Posts: 766
  • Age: 31
  • Location: United States
Yeah, itís going to be a rough time for many of these space startups. Rocket Lab may have an opportunity to make more acquisitions.

You can find Rocket Labís financials here. Not sure how the level of detail compares to Yahoo Finance.
https://investors.rocketlabusa.com/news/news-details/2022/Rocket-Lab-Announces-First-Quarter-2022-Financial-Results-and-Guidance-for-Second-Quarter-2022/default.aspx

MustacheAndaHalf

  • Walrus Stache
  • *******
  • Posts: 5195
Yeah, itís going to be a rough time for many of these space startups. Rocket Lab may have an opportunity to make more acquisitions.

You can find Rocket Labís financials here. Not sure how the level of detail compares to Yahoo Finance.
https://investors.rocketlabusa.com/news/news-details/2022/Rocket-Lab-Announces-First-Quarter-2022-Financial-Results-and-Guidance-for-Second-Quarter-2022/default.aspx
Your link, annual report:
"(in thousands ..."
"Cash and cash equivalents ... $603,144"

Yahoo Finance:
"Total Cash (mrq)   603.14M"

Looks like a good match.  You said this is a dip like last time?  Did you mean March 2020?  I had to check if you lived in the UK when you said that!  Sounds like a very British way to keep a stiff upper lip during a 35% drop.

I predict 2022-2023 will be worse than March 2020.  The S&P 500 ETF "SPY" peaked at $480 and is $390 now, and I predict it falls below $300.  I'm already betting on it with -100% equity exposure through ETFs that hold derivatives.  If you're investing in RKLB and other US stocks, you're taking the other side of that bet.

What if someone offered you a bet: markets will drop 20% from here (SPY $390) within the next 12 months.  Would you bet that decline does not occur?  What if you were given 2:1 odds, meaning you triple your money if no correction happens?

AlanStache

  • Handlebar Stache
  • *****
  • Posts: 2465
  • Age: 42
  • Location: South East Virginia
Would there be regulatory issues with spacex buying rocketlab?  would this make the industry too consolidated?  I thought us govt people have specifically spoken about wanting alternate companies going into space to prevent a spacex monopoly.  Unless there were viable alternatives at the time of the acquisition, but that seem unlikely in the next few years. 

Herbert Derp

  • Pencil Stache
  • ****
  • Posts: 766
  • Age: 31
  • Location: United States
I looked at various competitors, and Rocket Lab's financials look better than any of them.  RKLB has more cash, and spends it more slowly.  You mentioned competitors being paralyzed - for some, maybe it's permanent.

I don't know if Yahoo Finance has the right data for Redwire, but it shows $6M cash on $90M in debts.  Then again, their quarterly report (from 10 days ago) mentions an arrangement for "enhanced liquidity", which sounds like they're in trouble.

That looks really rough for Redwire. Their market cap is only $235M right now. If companies like Redwire keep getting hammered by the recession, I wonder if Rocket Lab will have a chance to buy them out? Rocket Lab did mention that they were still looking to make additional acquisitions in their latest conference call. I personally think there’s a lot of synergy between Rocket Lab and Redwire and it would be interesting to see these companies come together.

I also took a look at Astra’s financials. They have $161M in cash and a loss of $85M in Q1 2022. Last quarter, they had $325M in cash. In comparison, Rocket Lab has $600M in cash and a loss of $26M in Q1 2022. Rocket Lab has more than triple the cash of Astra, and Astra has more than triple the loss of Rocket Lab! At this rate, Astra will run out of money in 2-3 quarters! I don’t think they will go bankrupt, but raising the cash they need to survive will be difficult in this market. Maybe the US government will bail them out somehow.
« Last Edit: May 23, 2022, 05:00:02 PM by Herbert Derp »

Herbert Derp

  • Pencil Stache
  • ****
  • Posts: 766
  • Age: 31
  • Location: United States
Would there be regulatory issues with spacex buying rocketlab?  would this make the industry too consolidated?  I thought us govt people have specifically spoken about wanting alternate companies going into space to prevent a spacex monopoly.  Unless there were viable alternatives at the time of the acquisition, but that seem unlikely in the next few years.

I doubt SpaceX would be interested in buying Rocket Lab. Rocket Lab doesnít have anything that SpaceX needs, their carbon fiber rocket technology is fundamentally different and incompatible with what SpaceX is doing, and SpaceX would much rather do things in house. In my opinion, it would be easier for SpaceX to just build their own version of whatever Rocket Lab is doing than to actually acquire Rocket Lab.

On the other hand, I do think it is likely that Rocket Lab will acquire one or more struggling space companies during the recession.

Herbert Derp

  • Pencil Stache
  • ****
  • Posts: 766
  • Age: 31
  • Location: United States
SpaceX's valuation has now reached $125B! Compare this to Rocket Lab's measly $2.12B valuation. If you think the huge gap in valuation is interesting given the similarities between the two companies, you're not the only one. Deutsche Bank's Edison Yu seems to think along the same lines, and believes that the disconnect in valuation between the two companies will decrease over time.

Quote
Rocket Lab USA's (RKLB) growth and margins for several business lines are expected to inflect over the next year, Deutsche Bank said in a note.

The company's new and larger Neutron rocket will be fully sold out for two to three years ahead of its first voyage, analyst Edison Yu said.

Yu said Rocket Lab's Space Systems segment is unappreciated.

"Looking ahead, the stock may be volatile due to tactical factors ... but we think the enormous disconnect in valuation will likely compress relative to SpaceX," the analysts said.

maizefolk

  • Walrus Stache
  • *******
  • Posts: 6683
SpaceX's valuation has now reached $125B! Compare this to Rocket Lab's measly $2.12B valuation. If you think the huge gap in valuation is interesting given the similarities between the two companies, you're not the only one.

In defense of the big differential, so far this year Rocketlab has launched on the order of 0.2% of the payload to orbit of SpaceX*, so the market is valuing RocketLab ~10x as high as SpaceX in terms of price to launch.**

*Very rough estimate based on the payload of each rocket and the number of launches so far this year.

*Yes RocketLab also has a satellite manufacturing arm but SpaceX also has Starlink so let's pretend those cancel out.

lutorm

  • Pencil Stache
  • ****
  • Posts: 608
  • Location: A large island in the middle of the Pacific Ocean
I guess the way I see it, everything is going down right now. I may as well just ride the market through this dip the same way as last time.
Not quite everything, SpaceX's stock valuation is up from $56 to $70, a 25% increase: https://www.bloomberg.com/news/articles/2022-05-17/musk-may-sell-spacex-shares-to-fund-twitter-deal-new-york-post

lutorm

  • Pencil Stache
  • ****
  • Posts: 608
  • Location: A large island in the middle of the Pacific Ocean
In defense of the big differential, so far this year Rocketlab has launched on the order of 0.2% of the payload to orbit of SpaceX*, so the market is valuing RocketLab ~10x as high as SpaceX in terms of price to launch.**
I heard somewhere that year to date, SpaceX has launched something like 85% of worldwide mass to orbit. (And most of that mass is Starlink.) Pretty nuts.

maizefolk

  • Walrus Stache
  • *******
  • Posts: 6683
In defense of the big differential, so far this year Rocketlab has launched on the order of 0.2% of the payload to orbit of SpaceX*, so the market is valuing RocketLab ~10x as high as SpaceX in terms of price to launch.**
I heard somewhere that year to date, SpaceX has launched something like 85% of worldwide mass to orbit. (And most of that mass is Starlink.) Pretty nuts.

Yeah, if I'm counting right SpaceX has launched 22 times in the first 21 weeks of this year (14 starlink missions and 8 external customer missions). That's enough lift to put half a million tons into low earth orbit*.

The numbers are close enough that it makes me wonder if they developed the starlink launch schedule for 2022 with a goal of breaking the >1 launch/week barrier this year.

*The true mass to orbit number is lower since not all launches were to low earth orbit and not all launches use Falcon 9's maximum (with booster recovery) payload capacity.

alcon835

  • Pencil Stache
  • ****
  • Posts: 542
I guess the way I see it, everything is going down right now. I may as well just ride the market through this dip the same way as last time.
Not quite everything, SpaceX's stock valuation is up from $56 to $70, a 25% increase: https://www.bloomberg.com/news/articles/2022-05-17/musk-may-sell-spacex-shares-to-fund-twitter-deal-new-york-post

Valuation of a private company really doesn't mean anything, though. If SpaceX were a publicly traded organization, it would have dropped the same as everything else.

lutorm

  • Pencil Stache
  • ****
  • Posts: 608
  • Location: A large island in the middle of the Pacific Ocean
I guess the way I see it, everything is going down right now. I may as well just ride the market through this dip the same way as last time.
Not quite everything, SpaceX's stock valuation is up from $56 to $70, a 25% increase: https://www.bloomberg.com/news/articles/2022-05-17/musk-may-sell-spacex-shares-to-fund-twitter-deal-new-york-post

Valuation of a private company really doesn't mean anything, though. If SpaceX were a publicly traded organization, it would have dropped the same as everything else.
It's not the same as a public market price, obviously, but it does mean something, in that there are investors that are willing to also pay that higher price, even now.

AlanStache

  • Handlebar Stache
  • *****
  • Posts: 2465
  • Age: 42
  • Location: South East Virginia
...
It's not the same as a public market price, obviously, but it does mean something, in that there are investors that are willing to also pay that higher price, even now.

That is the asking price to buy SpaceX?  But do we know how many takers they have at that price?  I dont fully understand how private companies like this work when you want to buy into them from the outside.  What I have seen elsewhere is than a valuation is made based on standard multiples of revenue or profit. 

MustacheAndaHalf

  • Walrus Stache
  • *******
  • Posts: 5195
...
It's not the same as a public market price, obviously, but it does mean something, in that there are investors that are willing to also pay that higher price, even now.

That is the asking price to buy SpaceX?  But do we know how many takers they have at that price?  I dont fully understand how private companies like this work when you want to buy into them from the outside.  What I have seen elsewhere is than a valuation is made based on standard multiples of revenue or profit.
I don't recall where I heard it exactly, but I think it was CNBC"s David Faber who mentioned that private equitiy (PE) valuations are inflated right now.  Experts in PE know the deal, but prices do not reflect conditions that have already impacted public markets.  That information is probably less useful over time, but I wouldn't trust PE values at the moment.

Didn't Elon Musk manipulate a funding round so SpaceX stock was priced at $420/share (before 10:1 stock split)?  I'm not sure it makes sense to trust that SpaceX has gone up 25% in an environment where RocketLab has lost over half it's value.  Mr Musk will have to compare the losses in TSLA stock (-28% YTD) with those in SpaceX (? YTD) and decide what mixture to sell.  Mr Musk offered $54.20/share for Twitter, and discovered he was very wrong about the price, pointing to the excuse of bot numbers to back out.  I wouldn't trust his assessment of SpaceX stock, but would wait for a funding round where actual buyers decide the price.

lutorm

  • Pencil Stache
  • ****
  • Posts: 608
  • Location: A large island in the middle of the Pacific Ocean
...
It's not the same as a public market price, obviously, but it does mean something, in that there are investors that are willing to also pay that higher price, even now.

That is the asking price to buy SpaceX?  But do we know how many takers they have at that price?  I dont fully understand how private companies like this work when you want to buy into them from the outside.  What I have seen elsewhere is than a valuation is made based on standard multiples of revenue or profit.
We know there were at least some takers.

I think in general private valuations are based on an analysis of the financials in the absence of any market signal, but any funding rounds have a strong pull on the valuation such that if someone's actually paid $X, that tends to be the valuation, too.


maizefolk

  • Walrus Stache
  • *******
  • Posts: 6683
Astra had another launch failure tonight. https://twitter.com/astra/status/1536046415679393793

They are currently batting 2 for 7 at successful launches. Space remains hard.

BicycleB

  • Magnum Stache
  • ******
  • Posts: 4169
  • Location: Colombia
  • Older than the internet, but not wiser... yet
RocketLab recently won a new contract in the non-launch space business, this one to build solar cells for a 2025 mission that another company (Ball Aerospace) is conducting for NASA. The mission, called GLIDE, is to study the earth's atmosphere on behalf of NOAA.

https://www.businesswire.com/news/home/20220609005322/en/Rocket-Lab-selected-by-Ball-Aerospace-to-Power-NASA%E2%80%99s-GLIDE-Spacecraft

https://spacewatch.global/2022/06/rocket-lab-selected-by-ball-aerospace-to-power-nasa-glide-mission/

https://www.rocketlabusa.com/updates/rocket-lab-selected-by-ball-aerospace-to-power-nasas-glide-spacecraft-2/

I didn't see a contract price, even on Rocketlab's press release / website update, but I assume this slightly strengthens the contention that RocketLab is succeeding in its plans.
« Last Edit: June 14, 2022, 11:38:05 AM by BicycleB »

BicycleB

  • Magnum Stache
  • ******
  • Posts: 4169
  • Location: Colombia
  • Older than the internet, but not wiser... yet
At $4/share, is RKLB a buy now? If not, when does it become one?

(as I write, most recent quote dropped from $4.03 to $4.02)
« Last Edit: June 14, 2022, 11:40:02 AM by BicycleB »

MustacheAndaHalf

  • Walrus Stache
  • *******
  • Posts: 5195
I sold RKLB at around $8/share back in April.
Earlier this week I sold off all individual stocks for reasons completely unrelated to Rocket Lab.  But Rocket Lab was part of that sell off, ...

The S&P 500 fell 10.1% since Jun 7, and Nasdaq 100 fell 11.0%.  Over that same time, RKLB fell 16.6%.

My prediction: RKLB hits $3/sh before it hits $5/sh.

While it helps RLKB fell 50% in 2 months, the prediction is also based on the S&P 500 falling further and RKLB falling at least as far as the S&P 500 (probably further).  So with apologies to the great discussions and contributors in this thread, I would short RKLB here instead of buying it.  (It's actually better to find competitors that are in worse shape than RKLB, and that fell at least as far.  I do not have a short position on RKLB)
« Last Edit: June 14, 2022, 12:49:35 PM by MustacheAndaHalf »

BicycleB

  • Magnum Stache
  • ******
  • Posts: 4169
  • Location: Colombia
  • Older than the internet, but not wiser... yet
Gizmodo summarizes the CAPSTONE mission, now scheduled for takeoff Monday 27th via Electron from Rocket Labs's New Zealand site.

https://gizmodo.com/nasa-capstone-artemis-lunar-gateway-1849104950