The space industry has been gaining momentum this year, with several space stocks appreciating in value. One of the most exciting space stocks in the market at the moment is Rocket Lab USA, Inc. (NASDAQ: RKLB) which is known for providing a wide range of services, chief of which is its launch services. With 6 successful launches in the first half of the year, more can be expected from the company as the management stated that it is still on track to reach 15 launches in 2023. This leaves 9 more launches this year, one of which occurred on July 18 when it launched 7 satellites for NASA, Space Flight Laboratory, and Spire Global. With the company forecasting an increase in its revenue per launch in Q2 2023, RKLB stock could be poised to run this year as a result of improved earnings – especially in the second half of the year.
RKLB Fundamentals
2023 Outlook
Through its Electron rocket, RKLB is dominating the small launch market thanks to its efficiency and success rate. With this in mind, the company has benefited greatly from the failures of other small launch companies – namely Virgin Orbital (OTC: VORBQ) which went bankrupt last April, and Astra Space, Inc. (NASDAQ: ASTR) which is plagued with rocket failures. These factors actually led customers of other failing companies to redirect their orders to RKLB according to its Q1 earnings call which is a testament to its capabilities in the small launch scene.
Currently, RKLB is operating at a cadence of 3 launches per quarter as it successfully had 6 launches in the first half of 2023. However, that number is set to increase in the second half of the year as the company reiterated its annual target of 15 launches. In this way, we can conclude that the company might have 4 launches in Q3 and 5 in Q4.
Based on this, RKLB has the potential to see substantial growth in its revenues especially since the company expects its average revenues per launch to increase in Q2. In Q1 2023, the company realized $19.6 million in revenues from 3 launches which means that its average revenue per launch is around $6.5 million. The company expects this number to increase in Q2 as it is guiding $23 million in launch service revenue which means that the revenue per launch would be around $7.6 million.
If RKLB is able to maintain its average revenue per launch at that level for the rest of the year, the company would be able to realize $30.6 million in revenues in Q3 and $38.3 million in Q4 based on our assumption of 4 launches in Q3 and 5 launches in Q4. This would allow RKLB to realize $111.5 million in annual revenues from its launch service segment only – representing an 83.6% increase YoY from $60.7 million in 2022.
Launch Frequency
Due to recent production developments and milestone achievements in regard to RKLB’s Electron rocket, the company may be poised to drastically increase its launch frequency soon. In the meantime, the company produces one Electron rocket every 18 days, indicating that it has the ability to supply itself with enough rockets in order to increase its launch frequency.
Additionally, RKLB is attempting to make Electron the world’s first reusable small rocket. On that note, the company successfully recovered Electron’s first stage following its latest launch which would help the company reduce its costs per launch substantially if it is able to reuse the rocket in further missions. On that note, the company’s launch services segment has a negative gross margin of 3.8% and reusability would propel this segment’s gross margin into the positives.
At the same time, the company appears to be capable of upscaling its launch schedule since it was able to execute 2 separate launches in a week. This is a very strong indication of the company’s upscaling potential since it is currently launching 3 rockets per quarter.
Another factor that could contribute to RKLB increasing its launch schedule is the location of its two launch sites. One of the most common causes of launch post postponement is temperature. It became abundantly clear after the Challenger incident that cold temperature is not something to scoff at in regard to rocket launches which is why rockets rarely launch in cold temperatures.
That said, RKLB is better at overcoming this hurdle than most due to the fact that it has a launch site in the US and another in New Zealand. This basically means that it has a site in each of the hemispheres indicating that RKLB is capable of shifting the launch schedules of its sites in order to avoid winter year around.
Keeping these factors in mind, as well as RKLB’s goal of launching 30 rockets per year it becomes abundantly clear that the likelihood of the company increasing its launch frequency in the coming quarters is high. For that reason, RKLB stock might be a worthy long-term hold
Neutron v. Falcon 9
Electron’s advantage lies in its fast production which allows for numerous launches, on the other hand, Neutron focuses on providing a much larger payload which is why RKLB is pricing its Neutron launches at around $50 million -$ 55 million. Given Neutron’s focus, it is clear that RKLB intends to make its new rocket a direct competitor to Space X’s Falcon 9 rocket.
With that in mind, RKLB is taking a page out of Space X’s book as it intends to add a cost-per-kilogram option for satellites – effectively mirroring Space X’s cost-per-kilogram pricing policy. However, Neutron stands to have a significant pricing advantage over Falcon 9 since its launch price is much lower than Falcon 9’s $67 million per launch.
Considering that Neutron is expected to enter the market in late 2024, RKLB could be poised for major financial growth starting 2025 and might even inch closer to profitability. The reason behind this is the expected revenues coming from Neutron’s launches. If RKLB is able to replicate Electron’s current launch cadence of 15 launches per year with Neutron, the company would generate $750 million annually at least from Neutron launches only.
Moreover, Neutron could be extremely cost effective since RKLB intends to reuse Neutron boosters 10 to 20 times. Based on the expected revenue streams and these cost savings, RKLB becoming profitable in 2025 may not seem a far-fetched target.
RKLB Financials
Looking into RKLB’s Q1 2023 report, the company’s financial health stands out as it has $990.9 million in assets including $208.3 million in cash on hand as well as $190.3 million in marketable securities. At the same time, the company has $350.8 million in total liabilities – of which $197.2 million are current liabilities and $100.7 million in long-term debt. Given that the company’s cash balance and marketable securities dwarf its total liabilities, it appears to be in a very strong financial position.
In terms of revenues, RKLB reported $54.8 million consisting of $19.6 million in launch services revenues and $35.2 million in space systems revenues. However, the most notable thing in the company’s balance sheet is its more efficient cost of revenue. In Q1 2022, the company reported a gross profit of $4.5 million from its space systems segment and this number improved in Q1 2023 to $7.1 million due to increased revenues and lower cost of revenues.
This indicates that the company is running its space systems segment more efficiently which is a promising sign for the company’s future. At the same time, the company’s cost of revenue should decrease in the coming quarters as it successfully recovered the first stage of Electron following the latest launch to reuse it in future launches.
Meanwhile, operating costs increased YoY from $36.5 million to $52.3 million mainly due to the increase in research and development costs from $13.4 million to $23.9 million. This increase in research and development costs is mainly the result of the company developing its Neutron rocket, Electron’s first stage recovery, Photon spacecraft features and capabilities, and expanding its portfolio of spacecraft components and subsystems.
Despite this increase, the company expects research and development costs to decline as a percentage of revenue which could be due to better revenues in the coming quarters. However, as a result of the increase in operating costs, the company’s net loss widened YoY from $25.8 million to $45.6 million.
Technical Analysis
RKLB stock is currently in a bullish trend and is trading in an upwards channel that it recently broke out of. Looking at the indicators, the stock is trading above the 200, 50, and 21 MAs which is a bullish indication. However, the RSI is overbought at 83 and the MACD is starting to curl bearishly.
As for the fundamentals, RKLB stock is currently running due to the size of its latest mission as it launched 7 satellites. However, the stock’s value lies in the long term especially after the Neutron rocket is launched into the market. Given the expected revenue streams from Neutron alone, RKLB could be on the right track to reach profitability in the coming 2-3 years. With the RSI overbought and the stock yet to confirm breaking its upward channel, investors could wait for the stock to retest the upper trend line to confirm breaking the channel before taking long positions.
RKLB Forecast
With the company dominating the small launch market following the failures of its competitors, RKLB is well-positioned to grow its current launch cadence over the coming quarters. As we can expect 4 launches in Q3 and 5 launches in Q4 based on the company ensuring it is on track for 15 launches this year, its launch services revenue could be poised for a significant YoY increase this year given the higher revenues per launch.
Although Electron has the potential to bring the company major success, Neutron remains its highest potential rocket thanks to its ability to rival Space X’s Falcon 9. Considering Neutron’s pricing advantage over Falcon 9, the company may be poised to gain a substantial share of that market once Neutron is launched in late 2024. Given Neutron’s potential to boost the company’s profitability prospects, RKLB stock could be a worthy long-term hold as more developments are unveiled.
RKLB Fundamentals
2023 Outlook
Through its Electron rocket, RKLB is dominating the small launch market thanks to its efficiency and success rate. With this in mind, the company has benefited greatly from the failures of other small launch companies – namely Virgin Orbital (OTC: VORBQ) which went bankrupt last April, and Astra Space, Inc. (NASDAQ: ASTR) which is plagued with rocket failures. These factors actually led customers of other failing companies to redirect their orders to RKLB according to its Q1 earnings call which is a testament to its capabilities in the small launch scene.
Currently, RKLB is operating at a cadence of 3 launches per quarter as it successfully had 6 launches in the first half of 2023. However, that number is set to increase in the second half of the year as the company reiterated its annual target of 15 launches. In this way, we can conclude that the company might have 4 launches in Q3 and 5 in Q4.
Based on this, RKLB has the potential to see substantial growth in its revenues especially since the company expects its average revenues per launch to increase in Q2. In Q1 2023, the company realized $19.6 million in revenues from 3 launches which means that its average revenue per launch is around $6.5 million. The company expects this number to increase in Q2 as it is guiding $23 million in launch service revenue which means that the revenue per launch would be around $7.6 million.
If RKLB is able to maintain its average revenue per launch at that level for the rest of the year, the company would be able to realize $30.6 million in revenues in Q3 and $38.3 million in Q4 based on our assumption of 4 launches in Q3 and 5 launches in Q4. This would allow RKLB to realize $111.5 million in annual revenues from its launch service segment only – representing an 83.6% increase YoY from $60.7 million in 2022.
Launch Frequency
Due to recent production developments and milestone achievements in regard to RKLB’s Electron rocket, the company may be poised to drastically increase its launch frequency soon. In the meantime, the company produces one Electron rocket every 18 days, indicating that it has the ability to supply itself with enough rockets in order to increase its launch frequency.
Additionally, RKLB is attempting to make Electron the world’s first reusable small rocket. On that note, the company successfully recovered Electron’s first stage following its latest launch which would help the company reduce its costs per launch substantially if it is able to reuse the rocket in further missions. On that note, the company’s launch services segment has a negative gross margin of 3.8% and reusability would propel this segment’s gross margin into the positives.
At the same time, the company appears to be capable of upscaling its launch schedule since it was able to execute 2 separate launches in a week. This is a very strong indication of the company’s upscaling potential since it is currently launching 3 rockets per quarter.
Another factor that could contribute to RKLB increasing its launch schedule is the location of its two launch sites. One of the most common causes of launch post postponement is temperature. It became abundantly clear after the Challenger incident that cold temperature is not something to scoff at in regard to rocket launches which is why rockets rarely launch in cold temperatures.
That said, RKLB is better at overcoming this hurdle than most due to the fact that it has a launch site in the US and another in New Zealand. This basically means that it has a site in each of the hemispheres indicating that RKLB is capable of shifting the launch schedules of its sites in order to avoid winter year around.
Keeping these factors in mind, as well as RKLB’s goal of launching 30 rockets per year it becomes abundantly clear that the likelihood of the company increasing its launch frequency in the coming quarters is high. For that reason, RKLB stock might be a worthy long-term hold
Neutron v. Falcon 9
Electron’s advantage lies in its fast production which allows for numerous launches, on the other hand, Neutron focuses on providing a much larger payload which is why RKLB is pricing its Neutron launches at around $50 million -$ 55 million. Given Neutron’s focus, it is clear that RKLB intends to make its new rocket a direct competitor to Space X’s Falcon 9 rocket.
With that in mind, RKLB is taking a page out of Space X’s book as it intends to add a cost-per-kilogram option for satellites – effectively mirroring Space X’s cost-per-kilogram pricing policy. However, Neutron stands to have a significant pricing advantage over Falcon 9 since its launch price is much lower than Falcon 9’s $67 million per launch.
Considering that Neutron is expected to enter the market in late 2024, RKLB could be poised for major financial growth starting 2025 and might even inch closer to profitability. The reason behind this is the expected revenues coming from Neutron’s launches. If RKLB is able to replicate Electron’s current launch cadence of 15 launches per year with Neutron, the company would generate $750 million annually at least from Neutron launches only.
Moreover, Neutron could be extremely cost effective since RKLB intends to reuse Neutron boosters 10 to 20 times. Based on the expected revenue streams and these cost savings, RKLB becoming profitable in 2025 may not seem a far-fetched target.
RKLB Financials
Looking into RKLB’s Q1 2023 report, the company’s financial health stands out as it has $990.9 million in assets including $208.3 million in cash on hand as well as $190.3 million in marketable securities. At the same time, the company has $350.8 million in total liabilities – of which $197.2 million are current liabilities and $100.7 million in long-term debt. Given that the company’s cash balance and marketable securities dwarf its total liabilities, it appears to be in a very strong financial position.
In terms of revenues, RKLB reported $54.8 million consisting of $19.6 million in launch services revenues and $35.2 million in space systems revenues. However, the most notable thing in the company’s balance sheet is its more efficient cost of revenue. In Q1 2022, the company reported a gross profit of $4.5 million from its space systems segment and this number improved in Q1 2023 to $7.1 million due to increased revenues and lower cost of revenues.
This indicates that the company is running its space systems segment more efficiently which is a promising sign for the company’s future. At the same time, the company’s cost of revenue should decrease in the coming quarters as it successfully recovered the first stage of Electron following the latest launch to reuse it in future launches.
Meanwhile, operating costs increased YoY from $36.5 million to $52.3 million mainly due to the increase in research and development costs from $13.4 million to $23.9 million. This increase in research and development costs is mainly the result of the company developing its Neutron rocket, Electron’s first stage recovery, Photon spacecraft features and capabilities, and expanding its portfolio of spacecraft components and subsystems.
Despite this increase, the company expects research and development costs to decline as a percentage of revenue which could be due to better revenues in the coming quarters. However, as a result of the increase in operating costs, the company’s net loss widened YoY from $25.8 million to $45.6 million.
Technical Analysis
RKLB stock is currently in a bullish trend and is trading in an upwards channel that it recently broke out of. Looking at the indicators, the stock is trading above the 200, 50, and 21 MAs which is a bullish indication. However, the RSI is overbought at 83 and the MACD is starting to curl bearishly.
As for the fundamentals, RKLB stock is currently running due to the size of its latest mission as it launched 7 satellites. However, the stock’s value lies in the long term especially after the Neutron rocket is launched into the market. Given the expected revenue streams from Neutron alone, RKLB could be on the right track to reach profitability in the coming 2-3 years. With the RSI overbought and the stock yet to confirm breaking its upward channel, investors could wait for the stock to retest the upper trend line to confirm breaking the channel before taking long positions.
RKLB Forecast
With the company dominating the small launch market following the failures of its competitors, RKLB is well-positioned to grow its current launch cadence over the coming quarters. As we can expect 4 launches in Q3 and 5 launches in Q4 based on the company ensuring it is on track for 15 launches this year, its launch services revenue could be poised for a significant YoY increase this year given the higher revenues per launch.
Although Electron has the potential to bring the company major success, Neutron remains its highest potential rocket thanks to its ability to rival Space X’s Falcon 9. Considering Neutron’s pricing advantage over Falcon 9, the company may be poised to gain a substantial share of that market once Neutron is launched in late 2024. Given Neutron’s potential to boost the company’s profitability prospects, RKLB stock could be a worthy long-term hold as more developments are unveiled.