We came across a bullish thesis on Rocket Lab USA, Inc. (RKLB) on Substack by Lorenzo Bastianelli. In this article, we will summarize the bulls’ thesis on RKLB. Rocket Lab USA, Inc. (RKLB)’s share was trading at $27.28 as of Nov 29th.
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Rocket Lab (RKLB) continues to cement its status as a leader in the burgeoning space industry, leveraging cutting-edge production capabilities and strategic partnerships to realize its vision of providing comprehensive space services. With its foundational technologies in rockets and spacecraft firmly established, the company is now focused on scaling operations to create its own constellations, offering highly sought-after services and capabilities. A recent highlight of this strategy was the signing of a multi-launch agreement for the Neutron rocket with a commercial constellation operator, reflecting strong market demand for Rocket Lab’s next-generation launch system.
This agreement positions Neutron as a pivotal player in the medium-lift launch market, a critical segment for national security and commercial needs. By carefully selecting its debut customers, Rocket Lab enhances the strategic potential of its launches, including the possibility of deploying entire constellations for this operator. The company’s ties to the U.S. government were further solidified through an $8 million Air Force contract, which underscores Neutron’s importance to the National Security Space Launch (NSSL) program. This collaboration not only advances Rocket Lab’s engineering capabilities, notably through its Archimedes engine development, but also ensures smoother integration into NSSL’s most critical missions, highlighting the dual benefits of defense partnerships.
Rocket Lab’s Q3 2024 performance underscores its momentum, with revenue surging 55% year-over-year, primarily driven by its thriving space systems segment. The company’s spacecraft production line in Long Beach is operating at unprecedented speed, addressing a backlog exceeding 40 spacecraft and highlighting its capability to industrialize space systems production efficiently. Despite ongoing cash burn of $30–$50 million per quarter, this is expected to taper off once Neutron begins generating revenue, likely by late 2025 or early 2026.
Financially, Rocket Lab’s outlook remains robust, with projected Q4 2024 revenue growth exceeding 100% year-over-year. Improved gross margins, rising from 22.1% in Q3 2023 to 26.7% in Q3 2024, further demonstrate the scalability of its operations. Under CEO Sir Peter Beck’s leadership, Rocket Lab’s culture of relentless innovation continues to be its most significant competitive advantage, enabling rapid iterations in design and production that drive cost efficiencies and reinforce its economic moat.
