Rocket Lab is going public

Rocket Lab, SpaceX’s competitor, is going public. Should you invest?

What’s Rocket Lab?

• Private space company
• ~500 employees (Compared to spaceX: ~8,000)
• 97 satellites launched
• Electron is the latest rocket with the focus of launching small satellites to orbit
• Second most frequent launches in the U.S.
• Fourth most frequent launches in the world
• Recovered their first rocket November of 2020 (same method as SpaceX)
• CEO: Peter Beck (no exceptional accomplishments before Rocket Lab)

Revenue

• Rocket Lab makes money by taking payload to orbit
• On their website, you can book to get your payload sent to space and they charge you based on weight, size, etc
• 2018: $13.5M
• 2019: $48M
• 2020: $33M ($1.2B SpaceX)
• 2027 expectation: $915M

Merger

• Rocket Lab is expected to go public with a SPAC merger with Vector ($VACQ)
• The merger values the company at $4.1B
• Rocket Lab will have $750M in cash after merger closes

Valuation

• Valuing space companies is hard. We’ll use SpaceX comparison here to get a better sense of Rocket Lab value
• SpaceX valued at $74B at latest round of funding
• SpaceX did about $1.2B in 2020 therefore having a multiplier of about 62
• Rocket Lab is merging at $4.1B valuation
• Rocket Lab did $33M in 2020 therefore having a multiplier of about 124
• Smaller companies arguably have larger multipliers due to their potential of major growth. Also, space companies seem to have extraordinary multipliers in general; however, a 124X multiplier seems pretty insane.

Future of Rocket Lab

• Small payload focus
• Humans to space
• ~$1B revenue by 2027 (CEO expects)

Conclusion

Rocket lab is definitely an exciting company being one of Space X’s ‘competitors’; however, with a multiplier of ~120, buying the stock is extremely risky. The potential for growth is immense but the potential for failure is still high.