Rocket Lab (RKLB) - Finally a decent space company that we can invest in?

[Herbert Derp]

Here’s another take on Rocket Lab which I found interesting. A lot of people think that SpaceX has the potential to be a trillion dollar company. Rocket Lab is the closest company to SpaceX that is publicly traded, and is shaping up to be one of their primary competitors. If you compare the business plans of both companies, they both plan to do pretty much the same thing: build and operate their own reusable rockets so that they can launch their own fleets of satellites into orbit, which they also build themselves. In other words, both companies have a broad focus across launch, space systems, and space services.

As it stands today, SpaceX has a valuation of $100B and Rocket Lab is worth $3.86B. If in the future SpaceX becomes a $1T company, and if Rocket Lab is worth just 1/10 of that, they will be a $100B company which represents 25x growth from current levels!

[AlanStache]

I do agree in very large part with what you said but must quibble with the characterization that generating aerodynamic models can take minutes - yes some can but some also can take months to run on a cluster - others still require a wind tunnel.  And there can be big variation in quality of different methods or the suitability of different models for different phases of flight.  Aerodynamics is still far from "solved". 

AI... pifff....  The joke is that AI has never done anything because as soon as AI is applied to something and proven useful it is no longer called AI and renamed "ABC engineering" or "DEF math" or "GHI optimization". 

[maizefolk]

AI... pifff....  The joke is that AI has never done anything because as soon as AI is applied to something and proven useful it is no longer called AI and renamed "ABC engineering" or "DEF math" or "GHI optimization".

See this is the difference between the private sector and the public sector.

We take something we've been doing for years (like multivariate linear regression or random forest models), call it "machine learning" and round "machine learning" up to "artificial intelligence". So now everything is AI.

[Herbert Derp]

I do agree in very large part with what you said but must quibble with the characterization that generating aerodynamic models can take minutes - yes some can but some also can take months to run on a cluster - others still require a wind tunnel.  And there can be big variation in quality of different methods or the suitability of different models for different phases of flight.  Aerodynamics is still far from "solved". 

AI... pifff....  The joke is that AI has never done anything because as soon as AI is applied to something and proven useful it is no longer called AI and renamed "ABC engineering" or "DEF math" or "GHI optimization".

Absolutely, they can’t simulate everything perfectly yet. I admit that I may have overestimated the performance of current computer modeling. Otherwise SpaceX wouldn’t have had to blow up so many Starship prototypes! But you can’t deny that computer modeling has improved by leaps and bounds over the past two decades in terms of accuracy, cost, and accessibility.

BTW here is an article that discusses some of what Relativity Space is doing to use AI to assist with 3D printing:
https://www.wired.com/story/massive-ai-powered-robots-are-3d-printing-entire-rockets/amp

Ellis says the real secret to Relativity’s rockets is the artificial intelligence that tells the printer what to do. Before a print, Relativity runs a simulation of what the print should look like. As the arms deposit metal, a suite of sensors captures visual, environmental, and even audio data. Relativity’s software then compares the two to improve the printing process. “The defect rate has gone down significantly because we’ve been able to train the printer,” Ellis says.

With every new part, the machine learning algorithm gets better, until it will eventually be able to correct 3D prints on its own. In the future, the 3D printer will recognize its own mistakes, cutting and adding metal until it produces a flawless part. Ellis sees this as the key to taking automated manufacturing to other worlds.

“To print stuff on Mars you need a system that can adapt to very uncertain conditions,” Ellis says. “So we're building an algorithm framework that we think will actually be transferable to printing on other planets.”

This article discusses using AI to generate 3D structures with optimized performance characteristics:
https://www.bbc.com/future/article/20181129-the-ai-transforming-the-way-aircraft-are-built

It looks more like a chicken carcass than a drone. Wishbone-thin struts hold together a skeletal scaffold that seems too fragile to fly.

But don’t be fooled. It may not look it, but this design is one of the strongest among thousands of alternatives. We know because an artificial intelligence has dreamed up and tested every one of them.

The use of massive computing power to conjure radical new designs automatically – a process known as generative design –  is revolutionising the way human designers work, letting us build things we previously couldn’t have imagined.

The technology is already designing everyday industrial components from seatbelt brackets in cars and motorbike chassis to cabin partitions in passenger aircraft. Not only are these computer-generated designs stronger and lighter than human-crafted solutions but they’re weird – designs that no human would have come up with in the first place.

Relativity Space is currently using generative design to design some of the structures for its upcoming rockets, most notably the dragonfly wing design for the grid fins on the Terran R:

“The launch vehicle that we’re going to be flying is going to look totally different from those that are traditionally manufactured,” Ellis claimed. “You get much more organic structures than you normally get. The shapes and forms of what comes out of the printer, and what the launch vehicles look like, will be significantly different.”

He gave few specifics about how that would work, but did give one example. “A far fewer part count is a real advantage,” he said. “You get more highly integrated components that look very, very complex, but there are fewer of them. The complexity is driven by software, so you end up with these more organic-looking shapes that are more efficient.”

This technology hasn’t gone mainstream yet but I expect that we’ll be seeing a lot more AI in aerospace manufacturing over the next decade.

A few more interesting articles on the subject:
https://medium.com/intuitionmachine/the-alien-look-of-deep-learning-generative-design-5c5f871f7d10

https://www.slashgear.com/vw-trained-ais-to-design-better-3d-printed-car-parts-03582659

[MustacheAndaHalf]

I really appreciate how you backed up your point about Old Space Companies not adapting with an example of cost overruns from Boeing.  What about the James Webb Telescope?  I think Boeing and Lockheed Martin contributed to it, and it is looking successful.  Another example is NASA's Perseverance rover on mars, also successful and I think Lockheed Martin worked on that as well.  If Older Space Companies can still deliver, will governments be reluctant to trust newcomers?

That could be the biggest obstacle to government contracts.  But I suspect if Old Space Companies can't deliver, they'd be willing to subcontract to newer space companies.

Does anyone have a complete or partial list of space related companies that went public in the last 2 years?

[Herbert Derp]

I really appreciate how you backed up your point about Old Space Companies not adapting with an example of cost overruns from Boeing.  What about the James Webb Telescope?  I think Boeing and Lockheed Martin contributed to it, and it is looking successful.  Another example is NASA's Perseverance rover on mars, also successful and I think Lockheed Martin worked on that as well.  If Older Space Companies can still deliver, will governments be reluctant to trust newcomers?

That could be the biggest obstacle to government contracts.  But I suspect if Old Space Companies can't deliver, they'd be willing to subcontract to newer space companies.

I don’t think the James Webb Space Telescope is a good example of a successful Old Space project. Although the telescope has finally been deployed successfully, the project became infamous for delays and cost overruns. Development began in 1996 for a launch that was initially planned for 2007 with a $500M budget. But it was actually launched in 2021 after spending $10B. So yeah, 14 years late and 20x over budget, not good!

Another prime example of the failings of Old Space is the Boeing Starliner, which has been delayed for years and still hasn’t completed a successful flight despite being billions of dollars more expensive than SpaceX’s Dragon capsule which has been flying since 2019.

Does anyone have a complete or partial list of space related companies that went public in the last 2 years?

This website has some good information:
https://spacefund.com/intelligence/

Also check out the report linked to in this article:
https://www.forbes.com/sites/johnkoetsier/2021/05/22/space-inc-10000-companies-4t-value--and-52-american

[AlanStache]

I would make a distinction between an "aerodynamic model" and a "simulation". 
>> Aerodynamic model: static set of equations and data tables that calculates aero forces/moments given a vehicles configuration and state (state = airspeed, ambient air density, control deflections, direction air is impacting vehicle from, etc)  Aerodynamic models (generally) exist independent of time or independent of the previous set of inputs (rotor craft can be there own beast).

>> Simulation: is (generally) the time domain prediction of how a vehicle (generally) will react.  Where the simulation will include either the hardware components (bench testing) or software representations of the real components.  ie a sim will have aerodynamics, propulsion, sensor, guidance/controls, weight and balance, etc models all interacting in a way that is designed to mimic the real world.  A sim will integrate F = ma, where forces are aero + propulsion + ground reaction + other; mass is set at the start and changes with fuel burn.  Integrate "a" to get velocity, integrate velocity to get position (adding in initial conditions). 

JWST: is a one-off-cant-fail device where spacex and RL are trying to build large numbers of widgets.  They can make the calculation that if x% of widgets fail it is cheaper than upping the engineering/production/launch weight so that only 0.9*x% fail - excluding launch vehicles :-)

[MustacheAndaHalf]

... What about the James Webb Telescope?  I think Boeing and Lockheed Martin contributed to it, and it is looking successful. ... If Older Space Companies can still deliver, will governments be reluctant to trust newcomers?

I don’t think the James Webb Space Telescope is a good example of a successful Old Space project. Although the telescope has finally been deployed successfully, the project became infamous for delays and cost overruns. Development began in 1996 for a launch that was initially planned for 2007 with a $500M budget. But it was actually launched in 2021 after spending $10B. So yeah, 14 years late and 20x over budget, not good!

Even measuring from when construction began in 2004, the predicted launch dates were 2007-2011.  I did not know this was 14 years late and almost got canceled by Congress.  I wonder if Congress has much motivation to pick New Space Companies?  I recall NASA picking Space X for a project without taking bids, which upset other companies.  But apparently for the cost, Space X was the only choice... maybe that's how this plays out.  Space X can afford to lobby Congress, and show that contracts are better done by newer companies.  I imagine a company Rocket Lab's size can't afford too much lobbying.

[Herbert Derp]

Even measuring from when construction began in 2004, the predicted launch dates were 2007-2011.  I did not know this was 14 years late and almost got canceled by Congress.  I wonder if Congress has much motivation to pick New Space Companies?  I recall NASA picking Space X for a project without taking bids, which upset other companies.  But apparently for the cost, Space X was the only choice... maybe that's how this plays out.  Space X can afford to lobby Congress, and show that contracts are better done by newer companies.  I imagine a company Rocket Lab's size can't afford too much lobbying.

This is less of a concern than you might think. The US government has a vested interest in the success of the US space industry, and takes special care to feed money to pretty much all private space companies. NASA's VADR program is a great example of this, where Rocket Lab is getting a slice of a $300M government handout. In another example, the government is giving Rocket Lab a $24M handout (out of a $75M pie) to help develop the upper stage for Neutron. These are just two examples out of many.

As it turns out, half of Rocket Lab's business is with the government! So they are not having any issues getting business from the government--in fact, the government is proactively feeding them business.

[BicycleB]

The US government has a vested interest in the success of the US space industry

To what extent is RKLB a New Zealand company, and to what extent a US company?

[Herbert Derp]

To what extent is RKLB a New Zealand company, and to what extent a US company?

Rocket Lab is a US company with headquarters in Long Beach, California. Their Electron factory and launch pads are in New Zealand, and their CEO is a New Zealand citizen. Rocket Lab started as a New Zealand company in 2006 but in 2013 they established their headquarters in the US and became a US company because there was no way that they were going to be able to tap into US capital markets and continue to grow the company by operating out of New Zealand.

At this point in time they have the majority of their employees and facilities in the US, and are continuing to expand their footprint in the US as they build out their space systems facilities in California and Colorado and their Neutron factory in Virginia. Their presence in New Zealand is not expanding at anywhere near the rate that it is expanding in the US, and by the time that Neutron is flying I don’t think anyone will perceive them as a “New Zealand company”.

Just their Neutron facility alone should be larger than anything they have in New Zealand. Peter Beck is on record as saying that if they tried to launch Neutron from New Zealand, it would take all the liquid oxygen in the entire country just to fill up the tank halfway!

[MustacheAndaHalf]

I hope they write "1 New Zealand --- " halfway up the fuel tank.  :)

Last week was very optimistic, which I don't expect to last.  Sometime in the next 4-5 weeks I expect the markets to drop and take RLKB down a bit further... at which point I plan to reach a full allocation in RLKB stock.

While wondering about analyst predictions, I found the following page where Yahoo also mentions similar companies.
https://finance.yahoo.com/quote/RKLB/analysis?p=RKLB

[MustacheAndaHalf]

A couple of Rocket Lab's smaller competitors stood out because they have revenue.  I bought a half allocation of both stocks today, mostly for more exposure to space companies.

"Planet Lab" (PL) $124M revenue, market cap 10x revenue
"Redwire Corp" (RDW) $103M revenue, market cap 4.5x revenue

Planet Lab has 7 analysts, with 6 "buys" and 1 "strong buy".  They went public via SPAC and lost -50% in mid December.  But I don't understand the almost cyclical volatility in the current environment.

Redwire isn't far above micro-cap size (250M), and has just 1 analyst ("strong buy").  Also a SPAC, but with a more gradual loss since IPO.  Seems to be recovering right now.

This was motivated partly by my new view on Rocket Lab: I'm going to give it a 1.5x allocation in my portfolio, so I bought more today.  Analysts have a favorable view (3 strong buy, 2 buy, 1 hold) of RKLB stock.  I think there's enough parallels with Space X that it will... uh... take off.  (sorry)

[Herbert Derp]

A couple of Rocket Lab's smaller competitors stood out because they have revenue.  I bought a half allocation of both stocks today, mostly for more exposure to space companies.

"Planet Lab" (PL) $124M revenue, market cap 10x revenue
"Redwire Corp" (RDW) $103M revenue, market cap 4.5x revenue

Planet Lab has 7 analysts, with 6 "buys" and 1 "strong buy".  They went public via SPAC and lost -50% in mid December.  But I don't understand the almost cyclical volatility in the current environment.

Redwire isn't far above micro-cap size (250M), and has just 1 analyst ("strong buy").  Also a SPAC, but with a more gradual loss since IPO.  Seems to be recovering right now.

Since you seem so interested in the space industry, I recommend that you stay informed with the latest news and learn about the companies you are interested in on YouTube. Here are some resources that you might find helpful!

Best websites for news about the space industry:

• SpaceNews
• Space.com

Good space investing YouTube channels:

• Unearthly Invest
• Launch Window Research
• Sven Witney

Here are some good videos on Planet Labs and Redwire from the above:

• Satellogic vs BlackSky & Planet Labs - Which Is the BEST Satellite Imagery Stock?
• Planet Labs vs BlackSky - Satellite Imagery Leader vs Promising Newcomer
• Why Redwire is the BEST SPACE stock out there
• Rocket Lab's vs Redwire's Acquisitions
• An Intro to Redwire Space Stock ($RDW)
• Why Redwire’s CEO Was the Perfect Choice

There are a lot of opinions among different people as to which space companies are the best to invest in. I like Rocket Lab because it is one of the largest and most diversified companies of the bunch, with technology that is both working and commercialized. I recommend that you do your own research and come to your own conclusions!

[maizefolk]

A couple of Rocket Lab's smaller competitors stood out because they have revenue.  I bought a half allocation of both stocks today, mostly for more exposure to space companies.

"Planet Lab" (PL) $124M revenue, market cap 10x revenue
"Redwire Corp" (RDW) $103M revenue, market cap 4.5x revenue

Planet Lab has 7 analysts, with 6 "buys" and 1 "strong buy".  They went public via SPAC and lost -50% in mid December.  But I don't understand the almost cyclical volatility in the current environment.

I'm a customer of PlantLab although we probably buy more from Maxar Technologies (30 cm resolution vs 50 cm is hard to pass up). Really happy with the product, I hope Planet moves to even higher resolutions soon. My understanding is the 30 cm threshold is a regulatory barrier rather than technical.

It's not entirely clear to me how effective a moat either Maxar or Planet have against new competitors springing up and offering the same service for less as the cost of launch continues to decline. Launch is most of the cost at this point, apparently a Planet Labs satellite only costs on the order of a few thousand bucks to build.

[Herbert Derp]

It's not entirely clear to me how effective a moat either Maxar or Planet have against new competitors springing up and offering the same service for less as the cost of launch continues to decline. Launch is most of the cost at this point, apparently a Planet Labs satellite only costs on the order of a few thousand bucks to build.

That’s a great point. The satellite imagery space is very crowded and I expect to see some consolidation there in the near future. This could be a great opportunity for a launch company with ambitions to own a satellite constellation like Rocket Lab or Astra to swoop in, acquire one of the cheaper satellite imagery companies, and then beat out the competition because they won’t be able to compete on launch costs.

Launch might not be a huge revenue driver compared to space systems and space services, but it is key to building a business moat around lower cost structure. It’s the same sort of idea that railroad companies a century ago had when they used their advantages as the railroad owner to enter into adjacent industries. In other words, any space systems or space services companies who also own the “railroads to space” will have a huge competitive advantage over those that do not.

Imagine this, but in space and hopefully with less exploitative practices:

[maizefolk]

The satellite imagery space is very crowded and I expect to see some consolidation there in the near future. This could be a great opportunity for a launch company with ambitions to own a satellite constellation like Rocket Lab or Astra to swoop in, acquire one of the cheaper satellite imagery companies, and then beat out the competition because they won’t be able to compete on launch costs.

Aside from Maxar and Planet Labs who all do you know who is playing in this space? I'm excited to learn about any new players. The frequency of imaging it is possible to get with Maxar is not so great. Planet's frequency is much better but they currently max out at 50 cm/pixel.

I guess there is also BlackSky -- they were the clients on Rocket Lab's failed launch back in May -- but BlackSky is all the way back 1 m/pixel resolution at least until 2023. Isn't much good for a lot of applications unfortunately.

[Herbert Derp]

Aside from Maxar and Planet Labs who all do you know who is playing in this space? I'm excited to learn about any new players.

This post has a brief list of companies. Hope you find that helpful!

[MustacheAndaHalf]

A couple of Rocket Lab's smaller competitors stood out because they have revenue.  I bought a half allocation of both stocks today, mostly for more exposure to space companies.

Since you seem so interested in the space industry, I recommend that you stay informed with the latest news and learn about the companies you are interested in on YouTube. Here are some resources that you might find helpful!
...
Good space investing YouTube channels:

My goal is buying a large number of stocks that collectively beat the market.  So these 3 companies are not actually that significant in my portfolio, and I haven't researched them much.  I'm somewhat worried that my other stocks are too similar, so space provides some diversification from that.

While I watched the entire interview with Rocket Lab's CEO, I generally avoid watching YouTube to learn about stocks.  I prefer reading material with data.  And most important to me are third party opinions where I know there's no conflict of interest.

I think you're right about Rocket Lab being the best space stock out there.  But for me, I'm investing in a number of stocks, which is why I bought a few more.  But I'm only doing a light amount of research before making the buy decision.  When I have less cash to invest that might change.

[MustacheAndaHalf]

"Planet Lab" (PL) $124M revenue, market cap 10x revenue

Planet Lab has 7 analysts, with 6 "buys" and 1 "strong buy".  They went public via SPAC and lost -50% in mid December.  But I don't understand the almost cyclical volatility in the current environment.

I'm a customer of PlantLab although we probably buy more from Maxar Technologies (30 cm resolution vs 50 cm is hard to pass up). Really happy with the product, I hope Planet moves to even higher resolutions soon. My understanding is the 30 cm threshold is a regulatory barrier rather than technical.

It's not entirely clear to me how effective a moat either Maxar or Planet have against new competitors springing up and offering the same service for less as the cost of launch continues to decline. Launch is most of the cost at this point, apparently a Planet Labs satellite only costs on the order of a few thousand bucks to build.

A few weeks ago I noticed Satellite images used by TV stations were from Maxar, and checked out their stock.  The stock had already spiked, so the added business seems to already be priced in.

[maizefolk]

I wouldn't necessarily recommend Maxar as an investment (as much as I like their products and so send them a bunch of money). They're something of a legacy space company that came out of a series of mergers of various commercial providers selling high resolution imagery to various branches of the US government. Their hardware is outstanding, but it's also expensive and it's not clear to me they have the cash flow to replace it as it reaches end of life, let alone invest in additional throughput.

[Herbert Derp]

Good news, word on Twitter is that Rocket Lab’s first helicopter catch attempt will happen the launch after next. So just one more normal launch to go before the helicopter recovery attempt! I can’t wait!

[MustacheAndaHalf]

Good news, word on Twitter is that Rocket Lab’s first helicopter catch attempt will happen the launch after next. So just one more normal launch to go before the helicopter recovery attempt! I can’t wait!

As crazy as helicopter recovery might sound, Rocket lab has already done a test of helicopter recovery.  Even parts of the rocket can have GPS, and then they combine that with a type of maneuverable parachute (which has a technical term I forgot).  It's a bit like a glider following a fixed direction while transmitting GPS co-ordinates, and relying on something maneuvering below it.

Realistically, I don't expect the first real attempt to work as well as the demo.  Don't you expect the first attempt to fail, and provide more information towards a successful follow up attempt?

[goodmoneygoodlife]

"As it stands today, SpaceX has a valuation of $100B and Rocket Lab is worth $3.86B. If in the future SpaceX becomes a $1T company, and if Rocket Lab is worth just 1/10 of that, they will be a $100B company which represents 25x growth from current levels!"

Yeah these kinds of arguments where it's like "if they can only, then..." is somewhat misleading because it lies under the assumption that some highly speculative thing would happen, and it's impossible to assign a probability to it. That said, I've a dumb question:

They've got some customers and some successful missions. Their last 10K said they did (in thousands):
5287 in revenue by end of Sept 2021
10670 in revenue by end of Sept 2020.

So their revenue dropped 50% YoY. Doesn't this seem unhealthy, regardless of how many customers they have?

Also, their cost of revenue is 17738 for end of Sept 2021 and 12555 end of Sept 2020, with 60% of it just in labor/manufacturing. This means they're doing a net of -5355 and 3137, respectively if we pretended everything was free except for the labor and manufacturing. They basically said this is the main cost they want to drive down, but was wondering like what are the initiatives of driving that down and how do you gauge what their progress is in driving down labor/manufacturing costs?

Also in a separate expense category their selling, general, and admin (not marketing and not R&D, and won't contribute to the actual product) was 25655 in 2021 and 6057 in 2020. Just admin and selling is exceeding revenue of 2021 and the 6057+12555*.6 also exceeds revenue of Sept 2020.

You might conclude their R&D would decrease their manufacturing costs, but how do you determine by how much?

And also, they say: "We will continue to actively promote our products. We also expect to invest in our corporate organization and incur additional expenses associated with transitioning to, and operating as, a public company, including increased legal and accounting costs, investor relations costs, higher insurance premiums and compliance costs. As a result, we expect that selling, general and administrative expenses will increase in absolute dollars in future periods but decline as a percentage of total revenue over time." How do you determine by how much?

Seems like they need initiatives that they will need to execute almost flawlessly in order for this to have a positive cashflow, which is a lot of "ifs". Say they cut their costs in HALF by next year, or:

17738*.3 + 25655*.5 (not even counting shareholder stuff, R&D, and other expenses) -- they'd only breakeven with their revenue if they 4X'd business (in other words, their admin / selling needs to increase by a factor of 4*2 = 8X).

Also keep in mind there might be some underlying in inflation of value in SpaceX's valuation due to Elon's reputation. In other words, people might count Elon being evolved as a massive value boost to the company, which is orthogonal to the fundamental business.

[Herbert Derp]

Realistically, I don't expect the first real attempt to work as well as the demo. Don't you expect the first attempt to fail, and provide more information towards a successful follow up attempt?

I'm pretty optimistic about it, actually. Mid-air retrieval of equipment returning from space is a proven process that was first done all the way back in 1955. Rocket Lab did another round of helicopter catch tests in January 2022 and they were very successful. By now, Rocket Lab has had a lot of practice catching stuff with the helicopter and understanding where the booster will hit the ocean.

Yeah these kinds of arguments where it's like "if they can only, then..." is somewhat misleading because it lies under the assumption that some highly speculative thing would happen, and it's impossible to assign a probability to it.

Yeah, that is just speculation. But it is based off of the observed fact that companies like Rivian, Lucid, and Nikola got massive valuations because they are the “same” as Tesla and Tesla is a $1T company. Rocket Lab is to SpaceX as Rivian is to Tesla IMO.

So their revenue dropped 50% YoY. Doesn't this seem unhealthy, regardless of how many customers they have?

Their order backlog is increasing by leaps and bounds, and I am confident that this will translate into revenue growth in the future. These are signed contracts. My main concern with the company right now is that Rocket Lab has a demand problem for launches. I am not seeing enough launches taking place this year and enough new launch contracts being signed to get us to one launch per month. Peter Beck swears that there is not a demand problem but for now it seems we have to take him at his word.

Also, their cost of revenue is 17738 for end of Sept 2021 and 12555 end of Sept 2020, with 60% of it just in labor/manufacturing. This means they're doing a net of -5355 and 3137, respectively if we pretended everything was free except for the labor and manufacturing. They basically said this is the main cost they want to drive down, but was wondering like what are the initiatives of driving that down and how do you gauge what their progress is in driving down labor/manufacturing costs?

Also in a separate expense category their selling, general, and admin (not marketing and not R&D, and won't contribute to the actual product) was 25655 in 2021 and 6057 in 2020. Just admin and selling is exceeding revenue of 2021 and the 6057+12555*.6 also exceeds revenue of Sept 2020.

You might conclude their R&D would decrease their manufacturing costs, but how do you determine by how much?

I can’t say how much but the general idea is that the R&D needed to make Electron and Neutron reusable should greatly decrease manufacturing costs. Also, the pivot to space systems and space services is very important because those are higher margin businesses than launch, where the majority of Rocket Lab’s revenue is currently coming from.

[Herbert Derp]

More good news for Rocket Lab! Russia's invasion of Ukraine effectively ended commercial business for Russia’s Soyuz rocket, and former Soyuz customers are looking elsewhere for launch services.

To be fair, SpaceX is going to be the primary beneficiary of these developments. Rocket Lab's Electron rocket is simply too small to act as a replacement for Soyuz, and Neutron won't be in service until 2024 at the earliest. For example, OneWeb just inked a contract with SpaceX to launch their satellites on Falcon 9, even though OneWeb is a direct competitor to SpaceX’s Starlink and doesn't want to give SpaceX their business. However, Rocket Lab is getting a ton of interest in Neutron from former Soyuz customers. Peter Beck revealed in an interview today that Rocket Lab is considering to build three Neutrons in 2024, instead of just one as originally planned. If this comes to pass, it will be great news for Rocket Lab.

In other news, the debut of Blue Origin's New Glenn rocket just got delayed by another year. New Glenn is an important competitor to Neutron, and it is looking increasingly likely that both rockets are going to debut around the same time. New Glenn was originally supposed to have its first launch in 2020. Hopefully Neutron will not encounter similar delays!

[jnw]

The market capitalization is only $7.1B right now for Rocket Labs right? That's what Alexa just told me.

Is this a relatively low market cap for a public space company?  Is there a lot of room for growth?  Could it 10X?

I saw the stock doubled for a short period a few months back.

[Herbert Derp]

The market capitalization is only $7.1B right now for Rocket Labs right? That's what Alexa just told me.

Is this a relatively low market cap for a public space company?  Is there a lot of room for growth?  Could it 10X?

I saw the stock doubled for a short period a few months back.

Rocket Lab currently has a market cap of $3.94B. They have one of the highest market caps of all pure-play New Space companies. That being said, SpaceX has a valuation of $100B, many times higher than Rocket Lab. If Rocket Lab succeeds in their long term plans, the stock should be worth multiples of what it is today.

[jnw]

Thanks I got a GTC+EXT buy limit order of 50 shares for $8.76 :)  I'll give it a shot :)

[Scandium]

The market capitalization is only $7.1B right now for Rocket Labs right? That's what Alexa just told me.

Is this a relatively low market cap for a public space company?  Is there a lot of room for growth?  Could it 10X?

I saw the stock doubled for a short period a few months back.

Rocket Lab currently has a market cap of $3.94B. They have one of the highest market caps of all pure-play New Space companies. That being said, SpaceX has a valuation of $100B, many times higher than Rocket Lab. If Rocket Lab succeeds in their long term plans, the stock should be worth multiples of what it is today.

The valuation of SpaceX is just based on irrational Elon Musk swagger, wall street circle-jerk. He gets high and talk about self-parking teslas on Mars > stock goes up billion dollars, etc. So not useful comparison for any company that operate in the "real world".

In other news; RKLB has been dropping a bit more than the market lately, I'm thinking of a adding a bit more funny-money. At some sub-$9 point.

[jnw]

Thanks for the info.  I DCA'd down from the original 50 @ $8.76.  Now I am 100 shares at $8.68. :)  To be honest, I might set a sell limit order for 100 @ $13.02 or so (for a 50% gain on my $868).

[Herbert Derp]

Rocket Lab’s next launch has been scheduled for April 1st, 2022—next Friday. Because of the delay, the revenue for this launch had to be shifted from Q1 to Q2, meaning that Rocket Lab will miss their Q1 2022 guidance. The stock is down today as a result.

In other news, I think this recent article underscores the importance of vertical integration in satellite manufacturing. Last month, the Department of Defense awarded three contracts: $700M to Lockheed Martin, $692M to Northrop Grumman, and $382M to York Space for a constellation of military communication and surveillance satellites. Each company has to deliver 42 satellites by 2024. Why was York Space vastly cheaper than the other two contract winners? Because they build their satellites in-house, whereas Lockheed Martin and Northrop Grumman are buying satellite buses from partner companies.

Rocket Lab is aiming to be one of the most vertically integrated satellite manufacturers in the world, even manufacturing their own solar panels and providing their own launch services. In other words, Rocket Lab will be even more vertically integrated than York Space. I am excited to see the level of cost efficiencies that Rocket Lab can achieve with their incredible level of vertical integration!

Check out this excerpt from the article:

“That is something that we’re seeing on both of our first two tranches, that one company is much lower than the other,” he said.

“When you see the three awards that we made, two to very large traditional defense primes that are not building their own satellites, they’re actually buying them,” Turner said. “Only one of our primes is literally building their own buses. And I think we’re seeing that in some of the costs that we’re getting.”

Turner said SDA is trying to create a competitive marketplace with real opportunities for companies to win satellite contracts every two years. The agency has said it wants to avoid “vendor lock,” or becoming dependent on a single vendor for any product or service.

However, two of the winners of Transport Layer Tranche 1 — Lockheed Martin and York Space — also won Transport Layer Tranche 0 in 2020.

That seems to contradict SDA’s rhetoric, Turner said. The agency is aware of that and is trying to figure out ways to open up the playing field despite government contracting rules that often favor incumbents because they have more experience.

“That’s actually something that has bothered me a little bit since we did the acquisition for the latest round of satellites,” he said. “We firmly believe at SDA that we do not have incumbents. We firmly believe that what we’re trying to do is create a marketplace and send a demand signal to the market.”

The Department of Defense really wants to open up these lucrative government contracts to companies like Rocket Lab. Just think of how competitive Rocket Lab can be here! This round of DoD contracts is worth a whopping $1.8B. Just last week, we were talking about a separate $2.5B satellite constellation that the DoD is building. These contracts absolutely dwarf the $143M Globalstar contract that Rocket Lab won. If Rocket Lab can just land part of one of these contracts, they will be sitting pretty!

[MustacheAndaHalf]

Cynical take: York Space is given 21.5% of the cash to build 1/3rd of the satellites.  Meanwhile Lockheed gets almost twice as much (39.5%) to build another 1/3rd.  It's nice a new space company get a cut, but ~80% still goes to old space companies.

Hopefully success with York Space can shift more money their way - and more money, in general, to newer space companies.

Herbert Derp - Personally I avoid mentioning exact amounts and shares to keep my portfolio more private.  That said, the individual stock picks I buy are roughly 0.1% each of my portfolio.  Is your Rocket Lab holding closer to 1%, 5%, 20% or 50% of your overall portfolio?

[Scandium]

Herbert Derp - Personally I avoid mentioning exact amounts and shares to keep my portfolio more private. 

Just curious; why should this matter? Especially when it's only a couple hundred. If you have millions yes maybe some hackers will track you down here and try to steal it, but even that seems rather unlikely.. I say this as someone who's usually very paranoid about privacy. We all know people here have a lot of money invested, what it's invested in seems pretty irrelevant..?

on topic; bought few more shares at $8! Total is above a couple grand now, which is about as much as I'm comfortable having in individual stocks. Just not enough to get really rich if it goes 10x, lol :D

[Herbert Derp]

Cynical take: York Space is given 21.5% of the cash to build 1/3rd of the satellites.  Meanwhile Lockheed gets almost twice as much (39.5%) to build another 1/3rd.  It's nice a new space company get a cut, but ~80% still goes to old space companies.

Hopefully success with York Space can shift more money their way - and more money, in general, to newer space companies.

I think the pro-Rocket Lab narrative here is that:

• Vertically integrated New Space companies are outcompeting legacy Old Space defense contractors on cost for lucrative US Department of Defense satellite contracts.
• The DoD understands this, and wants to “open up” these contracts so that commercial New Space companies have a better chance to win these contracts.
• Rocket Lab is positioning themselves to be one of the most vertically integrated satellite manufacturers in the world, and will be a prime beneficiary of the “opening up” of these contracts, because they will be extremely competitive on price. Rocket Lab has said flat out that they plan to be an extremely vertically integrated satellite manufacturer and launcher, and the list of companies that they have acquired shows clear progress towards this goal.
• All of this is more plausible because Rocket Lab has a history of working with the DoD and has stated that their business is “very, very intertwined with defence”. Some people in New Zealand have a problem with this but Rocket Lab has pivoted away from New Zealand and is now a US-based company with a burgeoning capability to design, manufacture, and launch satellite constellations from the US.

Herbert Derp - Personally I avoid mentioning exact amounts and shares to keep my portfolio more private.  That said, the individual stock picks I buy are roughly 0.1% each of my portfolio.  Is your Rocket Lab holding closer to 1%, 5%, 20% or 50% of your overall portfolio?

Just curious; why should this matter? Especially when it's only a couple hundred. If you have millions yes maybe some hackers will track you down here and try to steal it, but even that seems rather unlikely.. I say this as someone who's usually very paranoid about privacy. We all know people here have a lot of money invested, what it's invested in seems pretty irrelevant..?

I no longer discuss the contents of my portfolio on this website but let’s just say that I have enough RKLB that it will make a material difference for me if the stock 10x’s but won’t have much of an impact if it goes to zero.

[jnw]

The opportunity is huge, and the moat is deep. SpaceX seems to be too focused on Starlink and going to Mars and has not competed in this area. If Rocket Lab and Astra can establish themselves in this space, they could become very successful space platform companies and it will be very difficult for any new startups to challenge them.

Trying to understand how going to Mars would be profitable.  I mean the planet is desolate and 6 months away via travel -- at it's closest.  How would the astronaughts be protected from all the solar radiation for an extended period of time?  The space shuttles and ISS are all beneath an atmospheric belt which protects them from the sun's radiation right? (I think I read that but I forget what protects them.)

[Herbert Derp]

Trying to understand how going to Mars would be profitable.

Going to Mars is not profitable. The point I was making is that industry leader SpaceX seems too focused on its other endeavors to try and compete with Rocket Lab by selling satellite busses or satellite components to other companies or building out custom built constellations for third party clients.

In any case, there is a huge opportunity in the space industry. Many analysts expect the industry to rake in over $1T in annual revenue by the end of the decade, and this new space race may generate a fresh crop of billionaires.

[jnw]

Trying to understand how going to Mars would be profitable.

Going to Mars is not profitable. The point I was making is that industry leader SpaceX seems too focused on its other endeavors to try and compete with Rocket Lab by selling satellite busses or satellite components to other companies or building out custom built constellations for third party clients.

In any case, there is a huge opportunity in the space industry. Many analysts expect the industry to rake in over $1T in annual revenue by the end of the decade, and this new space race may generate a fresh crop of billionaires.

Do you also have some invested in Astra?  Or just RKLB?

[Herbert Derp]

I do own some Astra stock but that company is less mature than Rocket Lab and has some issues that need sorting out. I sold off half of my shares of Astra a few months ago after their first successful launch. Astra fills an important niche for the US military though, and I think they will stay around.

Now that Astra’s stock price has tanked to $4, it might be a good investment opportunity again. Their rockets are proven to work and they have finally deployed satellites to orbit. However, Astra is still extremely focused on launch, but most of the profit in the space industry is in space systems and space services, not launch. Astra remains fixated on launch because they need to make huge upgrades to their current rocket for their business model to work.

Rocket Lab has more resources than Astra and can afford to aggressively expand into space systems and space services while developing their next-generation Neutron rocket in parallel. As a result, Rocket Lab has a massive lead over Astra in terms of space systems and space services, and this lead is only getting larger as time passes.

Again, the real money in the space industry is in space systems (manufacturing satellites and satellite components) and space services (services provided by satellites). Rocket Lab recently signed a single $143M space systems contract to build satellite busses for Globalstar. Just that single contract brings them the same revenue as almost 24 Electron rocket launches, or two years worth of launches at Rocket Lab’s current launch rate!

Astra also has much less cash on hand. Astra will probably need to raise money and dilute the value of their stock in the future, whereas Rocket Lab can get by without raising money.

[Herbert Derp]

Terran Orbital, a satellite manufacturer and key competitor to Rocket Lab, has just gone public via SPAC. The SPAC currently trades under TWNT and will change its ticker symbol to LLAP ("Live Long And Prosper") once the merger is complete. The company will be valued at $1.8B, about half of Rocket Lab. Headquartered in Boca Raton, Florida, the company plans to build a 660,000 square foot manufacturing facility near Cape Canaveral, Florida. Terran Orbital says the facility will cost $300M to build, and will be able to produce over 1,000 spacecraft per year once operational. This facility is much larger than Rocket Lab’s space systems facilities. Terran Orbital is highly vertically integrated and produces 65 different satellite components, or 85% of the satellites it manufactures.

The earth imagery sector is getting even more crowded! Terran Orbital plans to expand into space services by building its own constellation of earth imagery satellites, with 96 spacecraft in orbit. The company plans to launch the first two of its satellites next year, and have the full constellation in orbit by 2026. Rocket Lab still hasn’t announced what their space services constellation will be. Surely, it won’t be for earth imagery—the market for that just seems too saturated.

Terran Orbital had $25M in revenue in 2021, all from its satellite solutions unit, and expects that to rise to $35M in 2022. In comparison, Rocket Lab had about $23M in space systems revenue in 2021 and expects that to rise to $61M in 2022. Terran Orbital expects to be profitable on an adjusted EBITDA basis by 2023, and projects $2.6B in revenue by 2026—with $918M coming from satellite solutions (space systems) and $1.7B from its earth imagery business (space services). This is more than double the $1.159B in revenue ($658M launch, $501M space systems) that Rocket Lab is projecting in 2026. Given how crowded the earth imagery sector is, I find it rather optimistic to think that Terran Orbital could out-muscle strong, established competitors like Maxar, Planet Labs, and BlackSky and claw out $1.7B of annual revenue from that business by 2026.

Rocket Lab is currently ahead of Terran Orbital in terms of space systems revenue for 2022, and it will be interesting to see if Terran Orbital can meet their revenue projections and overtake Rocket Lab in the coming years. In any case, I think the comparison of revenue projections between these two companies speaks to how realistic and achievable Rocket Lab's projections are compared to the extremely optimistic projections of some of their competitors.

Terran Orbital is definitely a company to keep a close eye on and compare to Rocket Lab going forward. We will soon see which contracts these companies manage to win and who's revenue projections come true.

[BicycleB]

^Interesting!

[Herbert Derp]

As I mentioned in my previous post, it is a very tall order for a company like Terran Orbital to out-muscle strong, established competitors like Maxar, Planet Labs, and BlackSky and carve out a niche in the earth imagery sector. I don't think Rocket Lab could pull off this feat, even with the cost structure advantage of being their own launch provider. However, Peter Beck has clearly stated that he intends for Rocket Lab to own its own space services constellation.

That is why I am skeptical that Rocket Lab will try and build out a completely new space services constellation of their own. Other companies have already established themselves in every space services sector that makes financial sense, such as earth imaging and satellite internet. Rocket Lab has to either come up with a novel idea for a space services constellation that hasn't been done yet, muscle their way in to a crowded market like Terran Orbital is attempting to do, or acquire an existing space services company. Personally, I can't think of any novel ideas for constellations aside from building infrastructure around the Moon or Mars, which doesn't make financial sense right now. Trying to go the Terran Orbital route and muscle in to a crowded market doesn't make sense either.

Therefore, I think it makes the most sense for Rocket Lab to acquire or merge with an established space services company. There is bound to be more consolidation in the space industry, and Rocket Lab has deliberately positioned themselves to benefit from this. The main reason why they went public in the first place was to facilitate the acquisition of other companies. So far, the companies that Rocket Lab have acquired have all been partners with Rocket Lab in the past. Rocket Lab was already used to working with these companies before acquiring them, and had made use of their technology on previous missions.

Furthermore, the stock prices of some space services companies like Spire Global and BlackSky have been plummeting in recent months. Spire Global and BlackSky both went public at $10 per share but have now dropped to $2.02 and $1.75, respectively. At this point, Spire Global has a market cap of only $305M and BlackSky has a market cap of just $203M. These companies are getting cheap enough to be acquired by Rocket Lab!

Also, both of these companies have worked with Rocket Lab in the past. Rocket Lab has launched satellites for both Spire Global and BlackSky, and BlackSky's satellites use Rocket Lab's separation systems, reaction wheels, and star trackers. Since BlackSky's market cap has gone so low and they use so much of Rocket Lab's technology, I think they would be a prime target for acquisition. BlackSky is more of a software company than a hardware company, and their investor presentation focuses on their artificial intelligence and big data analytics software platform than on the hardware of their satellites, which they do build in-house.

If Rocket Lab acquired BlackSky, they would gain another satellite factory which is already used to working with Rocket Lab's satellite components, but more importantly, they would get BlackSky's expertise in AI and big data. Rocket Lab has historically been a hardware company and acquiring BlackSky could be a good way to strengthen their software skills! That being said, Rocket Lab keeps saying that they only acquire companies that are "best in class", but as maizefolk has pointed out, the resolution on BlackSky's images is not best in class at 100 cm per pixel whereas their competition is at 30-50 cm per pixel. I wonder how easy it would be for BlackSky to upgrade their resolution? @maizefolk, do you know what their plans are for 2023?

Nevertheless, I think Rocket Lab and BlackSky have strong synergies. Imagine how competitive BlackSky's services could be if all that money they spent on Rocket Lab launches, separation systems, reaction wheels, and star trackers went straight to the bottom line! Meanwhile, the acquisition could provide Rocket Lab an entry point to space services, much needed AI and software expertise, and another satellite factory.

What do you guys think? Is the acquisition strategy Rocket Lab's best option to break into the space services sector?

[maizefolk]

If Rocket Lab acquired BlackSky, they would gain another satellite factory which is already used to working with Rocket Lab's satellite components, but more importantly, they would get BlackSky's expertise in AI and big data. Rocket Lab has historically been a hardware company and acquiring BlackSky could be a good way to strengthen their software skills! That being said, Rocket Lab keeps saying that they only acquire companies that are "best in class", but as maizefolk has pointed out, the resolution on BlackSky's images is not best in class at 100 cm per pixel whereas their competition is at 30-50 cm per pixel. I wonder how easy it would be for BlackSky to upgrade their resolution? @maizefolk, do you know what their plans are for 2023?

In principle BlackSky's Gen-3 satellites will be able to deliver 50 cm resolution. They'd like to start launching these in 2023, but the whole industry is launch capacity constrained particularly now that no one is ever going to trust Russia to be a commercial launch provider again.

But again, this is BlackSky aiming to catch up to today's state of the art in the next couple of years. Their challenge is that the state of the art isn't standing still. By the time BlackSky is able to get significant numbers of Gen3 50 cm resolution satellites into orbit, they'll likely be competing with Planet's Pelican constellation which will have resolution significantly below 50 cm resolution (we don't know exactly how much below 50 cm resolution yet). Planet contracts with SpaceX for launch which is probably the only non-capacity constrained launcher at the moment.

It's even possible that by the time BlackSky's Gen-3 satellites are in order they'll be competing with Albedo's 10 cm resolution imagery (they're the first people to ever get approval to sell imagery with resolution that high!) which is currently scheduled to start coming online in 2024. But they're an early stage startup so could easily fail or see timeline slippage.

[Herbert Derp]

In principle BlackSky's Gen-3 satellites will be able to deliver 50 cm resolution. They'd like to start launching these in 2023, but the whole industry is launch capacity constrained particularly now that no one is ever going to trust Russia to be a commercial launch provider again.

Neutron to the rescue?

But again, this is BlackSky aiming to catch up to today's state of the art in the next couple of years. Their challenge is that the state of the art isn't standing still. By the time BlackSky is able to get significant numbers of Gen3 50 cm resolution satellites into orbit, they'll likely be competing with Planet's Pelican constellation which will have resolution significantly below 50 cm resolution (we don't know exactly how much below 50 cm resolution yet). Planet contracts with SpaceX for launch which is probably the only non-capacity constrained launcher at the moment.

It's even possible that by the time BlackSky's Gen-3 satellites are in order they'll be competing with Albedo's 10 cm resolution imagery (they're the first people to ever get approval to sell imagery with resolution that high!) which is currently scheduled to start coming online in 2024. But they're an early stage startup so could easily fail or see timeline slippage.

Good points! I’d like to know what Terran Orbital is smoking if they think they can just barge into the earth imagery sector and achieve such a massive revenue by 2026 despite having no expertise with state of the art satellite optics technology. That gigantic satellite factory isn’t going to help them get to 30 cm per pixel. Does their strategy make any sense to you?

[MustacheAndaHalf]

Looking at Black Sky's statistics on Yahoo Finance, something puzzled me.  How does a company with 29M revenue and -65M EBIDA wind up with $195M cash?  And then I realized - the SPAC deal funded them.
https://finance.yahoo.com/quote/BKSY?p=BKSY

I think the key question is this: is Black Sky in decent financial shape?  I don't actually know.  But here's my random speculation as a lay person trying to think like a venture capitalist.

You can spot SPAC offerings by their months of $10/share price, like Black Sky.  Since then BKSY has fallen over 80% to wind up at $1.75/share.  That gives them a market cap of $212M.

Acquiring companies always pay a premium.  It looks like BKSY fell dramatically to around $2.65/share, and then fell more slowly from there.  If negotiating a buy out began around that time, or if management mentally locked in on that price, it could be difficult.  Paying a +50% premium is too expensive.

Maybe there's a compromise for +30% over current market price?  Which would mean a market cap of $275M.  Let's stay Rocket Lab does a stock swap, issuing new shares worth $275M to buy BKSY stock.  Rocket Lab's stock would dilute 7% (hitting us), and that $275M worth of stock would buy out holders of BKSY stock.

This gives Rocket Lab $195M in cash!  I think this is money from going public through SPAC, since their $29M revenue and -65M EBIDA is probably just eating away at cash.  If RocketLab knows how to fix that situation, it might make sense.

For the April 1 launch, RocketLab filed an 8-K capturing the news release:
"Customer: BlackSky through Spaceflight Inc"
If RocketLab buys BlackSky, they have a rocket and satellites to launch within the same company, and can sometimes cut Spaceflight Inc out of it - saving what I assume is a very small amount of money relative to valuations.

So the question still remains, is BlackSky in financial trouble?
($29M revenue, -65M EBIDA, $195M cash remaining)

[maizefolk]

Rocketlab’s road map doesn’t have Neutron planned to launch until 2024 and probably won’t be launching in customer projects in bulk until 2025 right? Not soon enough to help Black Sky hit their current 2023 target for Gen3.

If black sky’s market cap is 212 and they have 195 in cash, does that imply the market is valuing their infrastructure satellites IP and existing business at only $17M?

[MustacheAndaHalf]

If black sky’s market cap is 212 and they have 195 in cash, does that imply the market is valuing their infrastructure satellites IP and existing business at only $17M?

Oops, that ignores their debt.  Yahoo Finance lists $195M cash and $78M debt, giving a net cash position of $117M.  But later on the same screen, BYSY shows:
"Total Debt/Equity (mrq)  51.09"
https://finance.yahoo.com/quote/BKSY/key-statistics?p=BKSY

Back in 2020 I bought beaten up stocks (and made a huge profit), and one of my screening criteria was reasonable debt/equity.  I didn't want to own the first companies to go bankrupt, in case Congress waited before acting.  So this looks very sketchy to me, 51x as much debt as equity.  Where is that debt?

There's no information about the value of their inventory or sales in the pipeline, which could also be important.  I don't know if I'm seeing a mess because the company is a mess, or because Yahoo's data about the company is lacking.

[maizefolk]

So that would value the business itself (IP infrastructure sales relations satellites etc) at closer to 100M. That makes a lot more sense to me. Even with their lower res and lower revisit times, Black Sky does have working satellites in orbit and presumably a significant number of customers. They could shut down almost everything they are trying to invest in new satellites and services and have a significant amount of revenue at low cost for a number of years. Thanks!

[MustacheAndaHalf]

You can look for "reddit blacksky" to find someone doing their version of due diligence.  BlackSky has tried to put a constellation of satellites in orbit 3 times before, and never reached their stated goal.  Based on that, it's very likely their goal for 2023 will fail.  BlackSky lists "relationships" rather than committed sales.  They tout their relationship with RocketLab, but don't point to anything binding.  The reddit poster said they will be waiting on the sidelines until things are more stable at BlackSky.

That article mentioned Plantir Tech and Peter Thiel as investors in BlackSky.  So one thesis for the stock is that these investors open doors for BlackSky to more government contracts.  Looking at their press release, you could also claim most of their losses are from one time costs related to going public.

Here's their 2022 Feb press release talking about their full 2021 financials.
https://www.blacksky.com/2022/02/22/blacksky-reports-fourth-quarter-and-full-year-2021-results/

[maizefolk]

It was also interesting that BlackSky had a $18.4M satellite loss on their 2021 balance sheets. Presumably that's the two satellites lost from the failed Rocket Lab launch last May? If that loss hit their books does that mean they were self insuring? I assumed everyone launching satellites had insurance against the risk of loss during launch.

I think I found the reddit post you mean (BlackSky 4.0?). Some of the person's concerns are less valid than they were a year ago. BlackSky demonstrably has a, admittedly small, operational constellation of satellites now.

But I agree with the concern that poster makes about them having no moat. The post also brought up that Maxar (referenced up thread as the sole company providing 30 cm resolution imagery at the moment) launching a new constellation in 2022 called Worldview Legion that will dramatically reduce the current bottleneck for 30 cm imagery, in addition to Planet's new sub 50 cm resolution constellation.

The difficulty and cost of building satellites with high resolution imaging, getting them into the right orbits, and getting all the right permits and approvals to sell high resolution imagery commercially is sufficiently high, and the demand for satellite imagery for different applications is sufficiently large and price elastic, that once a satellite and constellation is up and functioning, the imagery it collects is going to have value. So I think the value of BlackSky's existing functional constellation is substantially greater than zero. (Edit: This is why I was surprised to see the satellite imaging space described as "crowded" in this thread. There are lots of companies planning to launch birds, but just not all that many places you can go to buy imagery today.)

It's just a question of whether the value of the imagery those satellites will collect over their designed lifespan is sufficiently greater than zero to justify the cost of building, launching and permitting. If not, it doesn't make sense to invest in a company that is going to spend its cash continuing to build and launch new satellites.

I don't find the argument that they will carve out a niche from having more access to government contracts particularly compelling. It is true that successfully competing for government contracts is its own art form that prioritizes a lot of additional things beyond just cost and capabilities. That's basically the approach UAL took to define a niche with respect to SpaceX. The problem is that over time success in the commercial market results in dramatic increases in capabilities and decreases in cost until cost and performance gap is so big that being really good about all other stuff isn't enough to win contracts anymore.