Introduction
It's been quite a while since I did a deep dive, so I figured it was about time for one. I asked our community which business I should cover and Rocket Lab came out on top with 50% of the votes.
Rocket Lab is one of those names I've been watching from the sidelines for a long time. Probably over a year now, but I never initiated a position. I really like what the company is building but I couldn't bring myself to pay the price for it.
But today is a great time to reevaluate, as the stock is down 60% from its prior high.
The questions I'd like to answer in this deep dive:
- What makes Rocket Lab tick and how do they differentiate themselves versus big brother SpaceX?
- Is the valuation attractive enough relative to what is currently priced into the stock?
What fascinates me about Rocket Lab is how they've been able to coexist alongside a behemoth like SpaceX. And not just that, Rocket Lab is thriving. Revenue growth is strong, they are taking major leaps towards becoming a full stack space business and, on top of that, they have a visionary leader.
Let's dive in and first have a look at how this all started.
1 - Rocket Lab's mission
Rocket Lab describes itself as an end to end space company. In practical terms, it wants to remove the friction between designing a space mission and operating it in orbit. While satellites and spacecraft are now the largest part of their revenue base, the company sells across the wider space chain: components, spacecraft, launch, hypersonic testing and mission operations.
The Rocket Lab story began with a simple idea: small payloads sometimes need a dedicated rocket. It has since expanded into the full space stack. From launch to space applications. The latter is the most recent addition to the company via its Iridium acquisition. More on that later.
*
Note: *A payload is the specific cargo, instrument, or equipment carried by a rocket or spacecraft to achieve the primary goal of a mission.
2 - Founding story
Peter Beck founded Rocket Lab in New Zealand in 2006. His idea was not that Rocket Lab would build the largest rocket. It was that certain payloads could value schedule, orbit and mission control enough to pay for a dedicated rocket launch.
His vision is to build an end-to-end space company that acts as a complete "one-stop shop". Rather than focusing solely on launching rockets, he aims to control every part of the spaceflight supply chain.
Rocket Lab reached space with Atea 1 in 2009, announced Electron in 2014 and reached orbit with Electron in January 2018. Today, they have completed 96 successful Electron launches and their new flagship rocket, Neutron, is scheduled for its first flight in late 2026.
If we look at their history, Rocket Lab has used acquisitions and internal engineering to move into satellite components, spacecraft platforms and mission operations, gradually expanding their footprint across the entire stack.
3 - What problem does Rocket Lab solve?
I'd like to spend some time on what problem Rocket Lab actually solves for customers because it helps to understand the business.
Think of it this way: a satellite has a payload, such as a camera or communications equipment. Around it sits the spacecraft that provides power, keeps it pointed correctly and communicates with the ground. The customer then needs a launch to the right orbit and people who can operate the mission. Rocket Lab is the mission partner where you can go to.
Why integration is important
You can view a satellite mission as a chain. The payload carries the actual cargo, the spacecraft provides power and control, the launch places it in the correct orbit and mission operations keep it functioning. One weak link can delay or destroy the value of everything around it.
Rocket Lab's strategy is to own every part of that chain. Think of it like a house renovation. Hiring the cheapest electrician, plumber and carpenter may reduce each quoted price. But it can also leave the owner managing everyone separately. A capable main contractor costs more, but one party becomes responsible for the finished result.
Rocket Lab wants to become that contractor for space missions.
4 - Rocket Lab versus SpaceX
When looking into Rocket Lab, I wondered how Rocket Lab could survive alongside SpaceX and how they actually compare to one another. The main answer to that question is that they target different customers and use cases. Rocket Lab is the specialist whereas SpaceX is the generalist.
Continue with the full deep dive (Free)
I'm using several tables to compare Rocket Lab and SpaceX, which X doesn't support in the article composer. You can read the full article here: https://www.investingvisuals.io/rocketlab-deep-dive/It also cover 8 other chapters, including product portfolio, the Iridium acquisition, financials, valuation, risks and my personal thoughts on the stock.
