Our fees are changing on 4 March 2023. Learn more.

Stake logo

A rocket satellite being launched.
Share

Under the Spotlight Wall St: Rocket Lab (RKLB)

Once just the backdrop for sci-fi novels and movies, space exploration is a growing business today. Pushing through the final frontier is Rocket Lab, a U.S.-listed company with Kiwi roots. Let’s put it Under the Spotlight.

When you think of space exploration, you probably think of NASA or some space travel businesses like SpaceX, Blue Origin and Virgin Galactic (SPCE). But space, and the companies in that space, already play a huge part in your everyday life: the internet, GPS systems, TV and even the radio wouldn’t be possible without the launch of countless satellites around the Earth’s orbit. And that’s where Rocket Lab ($RKLB) thrives.

The company is one of the biggest players in the satellite sector, with over 1,700 satellites in the atmosphere using some kind of Rocket Lab technology. They design, manufacture, test, launch and repair satellites that are used for civilian communications, defence systems and scientific expeditions. For instance, NASA’s James Webb Space Telescope, which recently made the news with amazing images of outer space, uses Rocket Lab’s technology.

A heavy load

The company is currently developing Neutron, which will be its biggest rocket capable of delivering an 13,000kg payload to low Earth orbit. The vehicle should be operational sometime in 2024 which is good news for Rocket Lab as the total addressable market is expected to grow from US$380b to over US$1t by 2030. The biggest growth should come from space applications and launch services.

Rocket Lab is also developing whole reusability systems for its rockets, be it through engineering rockets that can perform a soft landing or even by capturing them with helicopters. Considering that 72% of the company’s customers are recurrent ones, these features could lower costs and thus boost sales.

To lure new customers, Rocket Lab offers rideshare options that make launches cheaper. Customers can also choose whether to launch in the U.S. or in New Zealand, in one of the company’s three launching sites.

Scaling up: not rocket science

The ride towards profit might still be shaky, but the company seems to be headed in the right direction. Costs of goods sold dropped from 134% of the revenue in 2020 to 91% by the end of the first semester of 2022, while administrative and R&D costs went from 68% and 54%, respectively, down to 44% and 34%. Rocket Lab would still have to halve those expenses, but they’ve definitely been tightening the belt.

In Q2 2022, revenue grew 36% to US$55.5m, with most of the growth being led by the space systems, as launching revenue practically stalled. Though sales have risen and costs have fallen relative to revenue, in absolute terms, expenses also grew almost 10% to US$38.2m. This was driven mostly by investments in the development of Neutron, their new rocket, and the reusability of their older models.

For Q3 2022, Rocket Lab expects revenue to range from US$60m to US$63m, with expenses rising to about US$43m. Gross margins are also expected to rise from 9% to between 12% and 14% due to higher average selling prices.

So with costs rising together with revenue, will Rocket Lab manage to reach infinity and beyond? 


Don’t have Stake?

Get $10 when you fund Stake AUS, a free US stock when you fund Stake Wall St. Do both, get both!

Terms & Conditions.


Related


Stake logo
Download Stake
App Store logo
Google Play logo
Stakeshop Pty Ltd, trading as Stake, ACN 610105505, is an authorised representative (Authorised Representative No. 1241398) of Sanlam Private Wealth Pty Ltd (Australian Financial Services Licence No. 337927) ('Sanlam') and an authorised representative (Authorised Representative No. 1241398) of Airwallex Pty Ltd (Australian Financial Services Licence No. 487221) ('Airwallex'). Stake is not authorised by Airwallex under Airwallex’s AFSL to arrange for clients to be issued with securities as Airwallex is not authorised under its AFSL for this purpose. Stake is not authorised by Sanlam under Sanlam’s AFSL to arrange for clients to be issued with a non-cash payment facility as Sanlam is not authorised under its AFSL for this purpose. Stake SMSF Pty Ltd (‘Stake Super’) is not licensed to provide financial product advice under the Corporations Act. This specifically applies to any financial products which are established if you instruct Stake Super to set up a self managed super fund (‘SMSF’). When you sign up to Stake Super, you are contracting with Stake SMSF Pty Ltd who will assist in the establishment of a SMSF under a ‘no advice model’. You will also be referred to Stakeshop Pty Ltd to enable your trading account and bank account to be set up in order to use the Stake Website and/or App. Stakeshop Pty Ltd will also run marketing and promotions to you under. For more information about SMSFs, see our SMSF Risks page.The information on our website or our mobile application is not intended to be an inducement, offer or solicitation to anyone in any jurisdiction in which Stake is not regulated or able to market its services. At Stake and Stake Super, we’re focused on giving you a better investing experience but we don’t take into account your personal objectives, circumstances or financial needs. Any advice given by Stake is of a general nature only. As investments carry risk, before making any investment decision, please consider if it’s right for you and seek appropriate taxation and legal advice. Please view our Financial Services GuideTerms & ConditionsPrivacy Policy and Disclaimers  before deciding to invest on or use Stake or Stake Super. By using our website or service in any way, you agree to our Privacy Policy and Terms & Conditions. All financial products involve risk and you should ensure you understand the risks involved as certain financial products may not be suitable to everyone. Past performance of any product described on this website is not a reliable indication of future performance. Stake and Stake Super are registered trademarks in Australia.

Copyright © 2023 Stake. All rights reserved.