Rocket Lab is currently mispriced as just a "small launch" company. This view ignores its rapid transformation into a diversified space prime. With the Electron rocket dominating the small launch market and the Space Systems division (building satellites for others) generating high-margin revenue, the foundation is solid. The upcoming Neutron rocket (medium-lift) is the ultimate catalyst, designed to break the SpaceX monopoly on constellation launches.
1. The "Duopoly" Thesis
The world (government and commercial) cannot rely solely on Elon Musk's SpaceX. They need a "Plan B." Rocket Lab is the only operationally mature alternative.
Neutron: Scheduled to fly soon, this reusable rocket targets the most profitable segment: mega-constellations (like Amazon Kuiper). This moves Rocket Lab from a niche player to a heavy hitter.
2. Space Systems: The Hidden Cash Cow
Investors focus on rockets, but Rocket Lab makes most of its money building spacecraft components (solar panels, software, separation systems) for other people's satellites.
This segment is growing faster than launch and commands better margins. It turns Rocket Lab into a "Space Infrastructure" company, not just a trucking company.
3. Execution Excellence
Unlike Virgin or Astra, Rocket Lab has delivered over 50 successful missions. They have a proven track record of execution, which significantly lowers the risk profile compared to PowerPoint rocket companies.
Conclusion
Rocket Lab is the most "real" company in the new space race. While the stock has rallied to $72 and recently down to $40, this model suggests there is still significant upside if Neutron succeeds in becoming the workhorse of the LEO economy. You are paying for the only viable hedge against a SpaceX monopoly.
How well do narratives help inform your perspective?
Disclaimer
The user Talos has a position in NasdaqCM:RKLB. Simply Wall St has no position in any of the companies mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The author of this narrative is not affiliated with, nor authorised by Simply Wall St as a sub-authorised representative. This narrative is general in nature and explores scenarios and estimates created by the author. The narrative does not reflect the opinions of Simply Wall St, and the views expressed are the opinion of the author alone, acting on their own behalf. These scenarios are not indicative of the company's future performance and are exploratory in the ideas they cover. The fair value estimates are estimations only, and does not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that the author's analysis may not factor in the latest price-sensitive company announcements or qualitative material.
