Rocket Lab

IThe business

Rocket Lab is two businesses that share a factory floor. The smaller one launches rockets. The larger one builds spacecraft and the parts that go inside other people’s spacecraft: solar cells, reaction wheels, star trackers, radios, separation systems and flight software.³ Headquarters are in Long Beach, California. Rockets are built and tested in New Zealand and launched from its own site at Mahia, on the North Island, or from NASA’s Wallops Island in Virginia.³ The year is the calendar year.

The rocket is Electron. It is built of carbon composite, its 3D-printed engines use electric pumps, and it carries up to 300 kg to low orbit.³ Through 30 June 2026 it had launched 87 times and put more than 250 spacecraft in orbit.² The Mahia site has two pads and, the company says, room for up to 120 launches a year.³ A suborbital version called HASTE flies test vehicles for missile-defence programmes. In July the Space Force signed for 12 HASTE flights with options for six more, worth up to $266M.² That is $14.8M to $22.2M a flight, depending on whether the options are used, though Spice said the contract also pays for infrastructure, against my estimate of about $9.5M for an ordinary Electron mission C (calculated).¹⁴

Space systems is where the revenue is. In the second quarter of 2026 it brought in $189.5M of the $234.1M total, and launch $44.6M.² Over the twelve months to June, space systems was 71% of revenue C (calculated). It was built partly by purchase. Rocket Lab bought Sinclair Interplanetary in 2020, Advanced Solutions and Planetary Systems in 2021, SolAero in 2022, GEOST in 2025, and the German laser-link maker Mynaric and the robotics firm Motiv this year.² Mynaric cost $155.3M, nearly all paid in 2,277,002 new shares.¹⁵

Who pays

Mostly governments. One government customer was 42% of revenue in the first half of 2026.² The 10-Q does not name it, but the backlog chart below shows where it comes from. In December 2025 the Space Development Agency awarded Rocket Lab $816M to build 18 missile-tracking satellites for its Tranche 3 layer, on top of an earlier Tranche 2 order.³ In the second quarter it added a $397M Space Force award to build Flatellite spacecraft for the SB-AMTI programme, which tracks aircraft from space, and to launch them on Neutron, plus more than $160M for three geostationary satellites.⁹ Those figures include options.

The CFO, Adam Spice, said the SDA programmes carry gross margins in the mid-30s.¹⁴ That matters for reading the numbers. Revenue from awards like these builds while the satellites are made and falls away once they are delivered, unless the next tranche is won. That is my reading of how such programmes run; the company has not given a year-by-year shape. Spacecraft platforms are, in his words, the lower-margin piece. Some components earn more than 70%.¹⁴

The backlog

Backlog was $2,356M at 30 June 2026, up from $995M a year earlier. Space systems was $1,415.8M of it and launch $940.2M. About 45% is due within twelve months.² Management says launch backlog is above 90 launches, its highest.⁹ Two cautions. Backlog moves in steps when a large government order lands, so it can sit flat for a year, as it did through 2024. And contracts can slip. The 10-Q says a 2022 order from MDA for 17 satellite buses is running late, partly on supplier delays, and that MDA may claim liquidated damages that Rocket Lab cannot yet estimate.²

Neutron

Neutron is the reason the stock trades where it does. Announced in March 2021, it is a medium rocket meant to carry about 13,000 kg to low orbit with a reusable first stage.² That puts it in the class of most satellite launches, which Electron is too small for. Management prices it at $50M to $55M a flight and plans a ramp of one, three and five flights, with the tenth flight as the point where it scales.¹⁴

The first launch was once expected in 2024, then 2025, then 2026.¹⁸ On 21 January 2026 a first-stage tank ruptured during a hydrostatic pressure test.¹⁹ Rocket Lab traced it to a layup done by a contractor by hand, and moved the work in-house to an automated fibre-placement machine.²⁰ Then, on 14 October, it said voids had been found in the carbon layers of a propellant dome made on that machine, and that the first launch would move into 2027.⁵²⁰ As quoted by The Register, Beck said: “we identified an issue with the manufacturing process for the propellant dome.”¹⁸ Testing is to run into the first quarter of 2027, and only then will a date be set.¹⁸ The 8-K points to a slide presentation on Rocket Lab’s investor site. The site refused my request, so what I know of the briefing comes from The Register and Via Satellite. In August, Neutron had been due at the pad in the fourth quarter.²

Spice has said adjusted EBITDA would turn positive in the quarter after a successful Neutron test flight, and free cash flow 18 to 24 months after that.¹⁴ So every quarter Neutron slips moves back the date the company pays for itself.

Iridium

On 28 June Rocket Lab agreed to buy Iridium Communications, which runs 66 satellites in low orbit and sells voice, data and tracking to about 2.7 million subscribers, with the US government as its largest single customer.⁴²¹ Each Iridium share gets $27.00 in cash and a number of Rocket Lab shares. The number floats inside a collar: 0.4000 shares if Rocket Lab is at or below $67.50, 0.2400 at or above $112.50, and enough in between to make $27.00.⁴ At today’s price the ratio sits at the floor, so the deal is worth $48.89 a share to Iridium holders, not the $54.00 announced C (calculated).¹

Iridium’s holders approved it on 24 September, with 99.6% of the votes cast in favour. The US antitrust waiting period expired in August. FCC consent and some foreign approvals are still needed, and both companies expect to close by mid-2027.²¹²² Rocket Lab raised most of the cash part by selling about 29.3M new shares for about $1.944B through an at-the-market programme, completed by 15 September, and Iridium’s $1.775B term loan stays in place with a Rocket Lab guarantee.²³

Iridium is a different kind of business from the rest of Rocket Lab. Revenue was $871.7M in 2025, and its operations produced $400.1M of cash, of which it spent $100.3M on equipment.²⁴ In the third quarter it earned $135.6M of operational EBITDA on $245.7M of revenue.²¹ That is one large, steady cash flow arriving inside a company that has never had one.

IIThe moat

I look for two things. Can a competitor take the customer at the same price, and would the customer even want to switch? On both, Rocket Lab today is weaker than its share price suggests, with one exception it has agreed to buy.

Launch

Electron is a real achievement. In 2025 it was, by the company’s account, the second most frequently launched orbital rocket in the world.³ BryceTech counted 18 orbital launches for Rocket Lab against 165 for SpaceX and 68 for China’s state launcher.¹⁰ But second place in launch is a long way behind first. SpaceX also flies rideshare missions that put dozens of small satellites up at once, and its share of all mass to orbit is far larger than its share of launches.¹⁰ Electron wins customers who need a particular orbit at a particular time. That is a niche with loyal buyers, and it does not keep a determined rival out.

Two things protect it a little. Mahia is a private site, so Rocket Lab sets its own schedule there, and a treaty between the United States and New Zealand lets it fly US technology from New Zealand soil, which the 10-K calls a competitive advantage over other launchers outside the US.³ Neither stops another rocket from taking the same customer.

Neutron would compete in a bigger market, but it has not flown, and the most valuable thing a rocket can have is a long record of flying. Electron took eight years of flights to build that record.³ A new rocket starts again at zero.

Space systems

The parts business has some genuine stickiness. Once a solar array or star tracker has flown on a satellite design, the buyer tends to stay with it, because changing a qualified part means testing again. Spice’s comment that some components earn more than 70% gross margins is consistent with that.¹⁴ The satellite contracts are another matter. They are won in competitions, mostly from governments, at mid-30s margins, and the next tranche is a new competition.¹⁴ One customer was 42% of revenue in the first half.² A buyer that large has the power, not the supplier.

The one real wall: spectrum

The thing that is hardest to copy is not a rocket. It is a licence. Iridium holds L-band spectrum that works through rain and inside buildings, and is used for safety services at sea and in the air.¹¹ Beck said on the August call that you could have all the S-band spectrum and satellites you wanted, and still not do certain things without L-band.¹¹ Others clearly think spectrum is worth paying for. The proxy records that SpaceX bought spectrum licences from EchoStar in September 2025, that Amazon agreed to buy Globalstar in April 2026, and that Iridium’s board ran a sale process because of both.⁶

But spectrum is defended at a regulator, and that is visible already. In August SpaceX told the FCC it does not oppose the deal, but asked it to weigh Iridium’s record of more than 50 petitions against rival satellite systems in eight months.²⁵ The FCC’s site refused my request for SpaceX’s letters, so that is the press account. The FCC’s own index lists a further SpaceX letter in the same docket on 15 October, which I also could not read.⁴² The value of a licence depends on how hard others can push into the same band.

Evidence it is narrowing

Neutron has slipped three years. In that time SpaceX has kept flying, and Iridium’s board reviewed the threat from SpaceX’s new spectrum in its own meetings.⁶ And the company is buying its way into each new area, which says the protection in those areas belonged to someone else first.

My judgement: Rocket Lab has a strong position in a niche and a good parts business, not yet a wall around either. If Iridium closes, it will own one asset that is hard to replicate. Whether Rocket Lab can widen that wall by building and launching Iridium’s next satellites more cheaply than anyone else is the question I can’t answer yet.

IIIThe competitive advantage

What Rocket Lab really has is range. Beck’s line is that the large space companies of the future will build their own satellites and launch them on their own rockets, and that only two companies can do that now.¹¹ The other is SpaceX. I think that is true as a description. The question is whether it is an advantage a customer pays more for.

There is some evidence it is. For SB-AMTI the Space Force bought spacecraft and launch together, and Rocket Lab says it is one of only two vendors doing both on that programme.⁹ Selling a whole mission lets it keep the margin that would otherwise go to the launcher or to the parts makers, and it lets it promise a schedule nobody else controls. The Flatellite award is also the first large order that depends on Neutron flying.

Against the alternatives

The table puts the three businesses on one line. Rocket Lab’s figure counts 692M shares: those outstanding on 5 August, the ATM shares since, Beck’s preferred stock, the collared forward shares, convertible notes and employee awards. It does not yet include the Iridium shares.

Two comparisons stand out. Rocket Lab on its own is valued at about 49 times revenue, close to the 57 times the market puts on SpaceX, which flies nine launches for every one of Rocket Lab’s and has Starlink.¹⁰ My SpaceX page already finds its price well above what I can support. And Iridium, a profitable business with a licence that cannot be copied, is valued at about 5.3 times revenue. The market is paying for Rocket Lab’s future, and paying very little for Iridium’s present. After the merger the same holder will own both.

Where it wins

Schedule, first. Owning a launch site and a rocket means a government customer with a tight date gets one supplier and one phone number. Speed of building, second. Its satellites and components have flown on more than 1,700 missions, including to the Moon and Mars, which few companies of its size can show.⁹ The components, third. Solar cells from Albuquerque and other parts sell to rivals as well as to Rocket Lab’s own satellites, which spreads the factory cost.³

Where it loses

Scale, by a distance. SpaceX’s Space segment alone took in $4.2B over the twelve months to September, 5.4 times Rocket Lab’s whole revenue C (calculated).⁸²⁶ Cost per kilogram, until Neutron flies and is reused. And money. Rocket Lab still funds its losses by selling shares, so every year of delay costs its holders a slice of the company. Its range is real, but range without scale is a good position, not yet a winning one.

IVManagement

Sir Peter Beck, 48, founded Rocket Lab in New Zealand and is its chairman, president and chief executive.²⁹ The company still looks like its founder: it designs most things itself and moves fast. Adam Spice is the finance chief.²⁹ In June the company hired Agostino Ricupati from Cooper Companies as chief accounting officer, taking that role from Spice.² For a company that has bought seven businesses and is about to buy an eighth, a separate accounting chief is overdue.

How they are paid

Until this year the pay was simple. Beck had a salary of $800,000 and grants of restricted stock units that vest with time, not with any result. His reported pay was $6.8M in 2025 and $20.1M in 2024.²⁹ The proxy says the company’s approach is base salary plus periodic long-term awards, primarily time-based RSUs, and that no discretionary bonuses were paid for 2025.²⁹ There are no targets for returns on capital, cash flow, Neutron dates or anything else. Time-based stock pays for the share price going up, whatever drives it.

On 30 March 2026 Beck cut his salary to $1, or the minimum New Zealand law requires, gave up any bonus, and forfeited all 392,155 of his unvested RSUs, worth about $22.5M at that day’s close C (calculated).¹²¹ The 8-K says his focus is long-term appreciation of shareholder value rather than short-term cash or equity incentives.¹² That is a strong signal, and an unusual one.

What he owns, and what he sold

The other half of the record matters as much. Beck’s family trust, the Equatorial Trust, holds his stake. On 27 March 2026, three days before the pay change, the trust adopted a Rule 10b5-1 trading plan.¹³ In May it converted 5,000,000 preferred shares to common, and between 6 and 8 July, a week after the Iridium deal was announced, the plan sold 3,275,779 shares at about $82 to $102, for $286.4M C (calculated).¹³ In December 2025 the trust had sold 2,500,000 shares for about $141M.¹³ Over the past year that is about $430M C (calculated).

A 10b5-1 plan is meant to take the timing out of the holder’s hands, and the plan’s sales are what such plans are for. I draw no conclusion about intent. What I can say is what the numbers show. Beck still controls about 43.2M shares: 40.95M preferred, 1.72M common in the trust and 0.49M held directly C (calculated).¹³² At $54.73 that is about $2.36B, about 5.9% of the company after the Iridium shares C (calculated). His own money in Rocket Lab is very large, and he has also taken a lot out near the highs.

The preferred stock carries more than its share count. While the trust and permitted transferees hold at least 5% of the company, the preferred elects at least 10% of the directors as a separate class.² Beck sits on the board as that director.²⁹ Spice, the finance chief, reported sales of about 1.84M shares for about $138M over the past year, and has pledged 622,452 shares against a loan, with board approval C (calculated).³⁰²⁹ No director or officer filed a purchase on the open market in that year.³⁰

What they did with capital

The cycle here is short, five years as a public company, so I judge it on what was raised and what it bought. Weighted shares were 466M in 2022 and 630M in the second quarter of 2026; with the September sale, Beck’s preferred, the collared forwards, awards and the Iridium shares, the count I use is 735M, about 58% more than in 2022 C (calculated).¹⁷² That dilution paid for Neutron, the acquisitions and the cash part of Iridium.

The selling was well timed. In the second quarter of 2026 Rocket Lab sold 8.15M shares through its ATM for $1,068M after costs, about $131 a share, near the May high.² The September sale was at about $66.36 C (calculated).²³ The collared forwards set a floor on another 7.45M shares worth at least $474M.² A management that sells stock when buyers are generous is doing right by the holders who stay, and on my numbers these sales were the best capital decisions of the year.

The buying is harder to praise. The proxy sets out how the Iridium price was reached. Rocket Lab opened on 15 April at $42.50 a share, all in stock. The only other bidder that made an offer, called Party A, proposed $41 to $45 in cash. Rocket Lab went to $52, then to $54, half in cash, and agreed a collar that protects Iridium holders if Rocket Lab’s shares fall.⁶ Iridium’s adviser, Evercore, valued Iridium at $29.97 to $45.54 a share on its discounted cash flow.⁶ So Rocket Lab paid above the other bidder and above the top of the seller’s own adviser’s range, and took the share-price risk itself. The collar has since done its job for Iridium: at today’s price the stock part is worth $21.89, not $27.00 C (calculated).

Following the incentives, then: Beck is paid in the share price alone, and owns enough that the share price over ten years matters far more to him than any salary. That pays him to build. It does not pay him to be careful with the price of acquisitions, or to hold back from issuing stock when it is dear, and nothing in the pay plan asks for returns on the capital used. The record so far is a good builder and a confident buyer.

VFinancials

Rocket Lab became public in August 2021 by merging with a listed shell, and its filings give full figures from 2020. That is six years and the twelve months to June 2026, not ten. In that time revenue rose 22 times, from $35M to $769M, and the company has lost money at the operating line every year C (calculated).¹⁶³²

The improvement is real but slow. Gross margin went from −33.5% in 2020 to 34.4% in 2025 and 37.3% over the past twelve months C (calculated). Launch drove most of it: its gross margin was 11.2% in 2023 and 40.8% in 2025.³ But research and development has grown nearly as fast as gross profit, because Neutron sits in it, and the operating loss in 2025, $229M, was the largest yet.³

What an owner could really take out

Nothing yet. Over the twelve months to June the reported net loss was $166M. Operating cash flow was −$222M, capital spending $149M and stock pay $82M, so owner cash flow was −$453M C (calculated).³² That is $287M worse than the reported loss. Three things explain the gap. Stock pay is a real cost paid in shares. Capital spending, which more than doubled in 2025 to $156M, runs well ahead of depreciation. And interest on the cash raised from shareholders, $26.6M in the first half of 2026 alone, flatters the net loss.⁹

How much of the capital spending is needed just to stand still? I can’t split it cleanly, because most of it is for Neutron and new capacity. If I charge only depreciation, $62M, as the cost of standing still, owner cash is still −$366M C (calculated). Either way the business does not yet fund itself, and every dollar of the loss has come from new shares.

Quality of earnings

The company’s preferred profit measures leave out stock pay, acquisition amortization and deal costs. Its adjusted EBITDA loss was $8.8M in the second quarter, against a GAAP operating loss of $57.5M.¹⁴⁹ Stock pay was 10.6% of revenue over the twelve months C (calculated). That second-quarter non-GAAP gross margin of 41.5% included a tariff refund that will not repeat, partly offset by a reserve against hardware for Neutron’s second flight.¹⁴ Guidance for the third quarter is 35% to 37%.⁹

Two smaller things are worth a line. Rocket Lab has lent money to three launch customers, interest-free until their launch and then at 9.5% to 12.6%.² Lending to customers to win launch contracts tells you something about who has the power in small launch. And the company has a federal tax loss carryforward of $840.9M, which will shield profits for some years once they come.³

The balance sheet

At 30 June Rocket Lab had $2,129M of cash and $258M of marketable securities, against $13M of convertible notes left after most converted into 23.0M shares earlier in the year.² The September share sale added about $1.94B gross.²³ Iridium will take most of it. The 10-Q says the deal needs more than $3.0B of cash at closing, and Iridium brings a $1.775B term loan that will stay, at a higher rate after closing, plus its own Aireon loans.²²³⁷ My estimate of the combined position at closing is about $0.2B of net debt, close to even E (estimate). The pro forma balance sheet adds $4.25B of intangible assets and $2.10B of goodwill, so for the first time most of what Rocket Lab owns on paper will be bought assets.³¹

VIValuation

First, how this goes badly wrong

Before any numbers, I ask what would most likely ruin the business or the investment, and work back. Here there are three, and they are not equally likely.

Neutron never becomes a business. It flies late, or flies but cannot be reused cheaply, or flies rarely. Then Rocket Lab is a small-rocket company and a government contractor with mid-30s margins, valued today at nearly fifty times revenue. Without Neutron, my base value is $7 a share E (estimate). Three target years have already passed.¹⁸

Iridium costs more than it earns. Its management’s own long forecast shows unlevered free cash flow of $529M in 2030 and −$21M in 2031, then $28M to $135M a year to 2035, as the satellites are replaced.⁶ The proxy says that version was not given to Rocket Lab.⁶ If the replacement costs what Iridium planned, the cash this deal buys arrives for about four years and then mostly stops for five, while SpaceX and Amazon buy spectrum of their own.⁶

The price. The business can work and the investment still fail. A buyer at $54.73 is paying for a company several times larger and more profitable than any case I can build. If Rocket Lab does well but not extraordinarily, the shares can fall a long way, as they already have: 64% since May.¹ Of the three, this is the one I think most likely.

So the questions for everything below are: when does Neutron earn money, what does Iridium really yield after its satellites, and how much success is already in the price.

What an owner gets today

Owner cash over the past year was −$453M, against a reported net loss of $166M C (calculated).² The difference is stock pay, capital spending ahead of depreciation, and interest on shareholders’ cash. In my base, Rocket Lab alone first produces positive owner cash in 2031, and uses $826M more between 2027 and 2030 E (estimate). Iridium’s cash offsets that from mid-2027, which is the honest case for the deal: it pays some of the bills while Neutron is built.

What I can’t judge

Three inputs matter most and can’t be known. What a Neutron flight will cost once the first stage is reused, which decides its margin. How many flights a year the market will buy from someone other than SpaceX. And what Iridium’s spectrum is worth in a world where SpaceX and Amazon are buying their own. For the first two I show ranges below instead of pretending to a precise number. For the third I use Iridium’s forecast with a haircut, and I say so.

How I value it

Fifteen years of owner cash, 2027 to 2041, then growth in perpetuity of 2.5%, 3.0% and 3.5% in the three cases. Rocket Lab’s own business is built from space systems revenue and margin, Electron and HASTE launches at about $9.5M each, Neutron flights at a price and margin, operating costs, tax after loss carryforwards, net investment and working capital. Iridium is its management’s extended forecast, kept at 85%, 95% or 100%, from 1 July 2027, with the cost of its new satellites cut by 0%, 25% or 40% for building and launching them in-house.⁶ Values are per share on 735.5M shares, which include the 43.7M Iridium shares at the 0.4000 ratio.

The discount rates. I use two. The ten-year Treasury yield was 4.94% at the price date, and Damodaran’s implied equity risk premium 4.20%.³²³³ On its five-year weekly beta of 2.35 against the S&P 500, Rocket Lab’s cost of equity would be 14.8%; on three years, 2.61, it would be higher still C (calculated).³⁴¹ Evercore used 15% to 18% for Rocket Lab’s cost of equity in its fairness opinion, and 9.0% to 10.0% for Iridium.⁶ I use 13% for Rocket Lab, below the formula, because a beta measured over a rise from $3.53 to $150.23 overstates how risky the business will be once Neutron flies. I use 9.5% for Iridium, the middle of Evercore’s range. Both are higher than the 10% on most of my pages, and the tables show what lower rates do.

Bear

Neutron reaches orbit in 2028 but never flies more than six times a year, at $50M and thin margins. Space systems grows 20% next year and then slows to single digits as the SDA work runs off. Rocket Lab alone does not make an owner profit until 2038. Iridium closes, its forecast proves 15% too high, and Rocket Lab saves nothing on its new satellites.

Base

Neutron flies in late 2027, three times in 2028, five in 2029, and reaches 28 a year by 2041 at a 35% gross margin. Space systems compounds from 28% next year down to 4%, to $3.7B. Opex grows 5% a year to 2031 and 4% after. Owner cash turns positive in 2031. Iridium delivers 95% of its forecast and Rocket Lab builds and launches its next constellation for 25% less.

Bull

Neutron works early and reuse works. It flies 16 times in 2030 and 50 a year from 2039, under a third of SpaceX’s 165 launches in 2025.¹⁰ Space systems grows above 20% for four years. On top, Rocket Lab builds new services on Iridium’s spectrum that reach $4.5B of revenue by 2041 at a 30% margin. Iridium hits its forecast and the new satellites cost 40% less.

What the price says

Turn it round. At $54.73, after the deal, the market values the company at about $40B including its estimated net debt C (calculated). Take off my base value of Iridium, $5.5B, and $34.9B is left for Rocket Lab’s own business. My base puts that at $1.8B E (estimate).

Steady owner cash of about $11B a year from 2036 is a third of all of SpaceX’s revenue over the past year.⁸ Put another way, the price needs my whole base case to grow 2.7 times as fast, all at once, giving 76 Neutron flights a year and revenue near $47.3B by 2041 C (calculated). Rocket Lab would need to be, in fifteen years, larger than SpaceX is today.

How much the answers move

The surprise in these tables is how little they move. The reason is that most of the value in every case is far away, and at 13% a dollar in 2041 is worth about 16 cents today C (calculated). Doubling Neutron’s long-run flights adds about $2.50 a share. The price is not a bet on Neutron flying. It is a bet on Rocket Lab becoming something much larger than a launcher.

Am I too harsh?

I tested it, because a base 80% below the price invites the question. Two inputs lean cautious. The first is the discount rate. I use 13% for Rocket Lab where most of my pages use 10%. At 10% for Rocket Lab and 8.5% for Iridium, my bull is worth $39, not $25 E (estimate). The second is near-term growth. My 2027 revenue before Iridium, $1.18B, is only 15% above the third-quarter guide of $250M to $265M a quarter, annualised at $1.03B.⁹ Management has not guided beyond the quarter, so that is my call. Then I put every cautious input to its kinder end at once: space systems growth of 40% next year and 30% after, a space systems margin near 40%, 46 Neutron flights a year at a 42% margin, and slower cost growth. That gives about $15 at my rates and about $21 at 10% and 8.5% E (estimate). Neutron flights and margin I do not think I have set low: my bull already has 50 flights a year. So the model is somewhat cautious, and I say so, but not by anything near the gap. Even my bull at 9% and 8%, with growth of 4% after 2041, is about $50, still below $54.73.

The margin of safety

I set it from the bear case: the price at which my $3 bear value is three quarters of what is paid, so $4. At $4 the market value would be about $2.9B, below my base value of Iridium on its own E (estimate). That tells you how far apart the price and my range are. The stock last closed that low in May 2024.¹

The price against the range

The price is 465% above my base and 121% above my bull. At $54.73 my base cash flows return −2.9% a year, and even the bull returns 5.1% E (estimate). Weighting the cases 25%, 50% and 25% gives $12 E (estimate). The market may be right and I may be wrong: the bull case needs the things I am least able to judge, and I may be too low on all of them at once. I would rather show that plainly than move the numbers until they meet the price.

Against the alternative

Every dollar here could go somewhere else. A ten-year Treasury pays 4.94%.³² My base return here is −2.9%. The nearer comparison is on this site. My SpaceX page finds its price 182% above my base value, and SpaceX already has the scale, the launch record and Starlink that Rocket Lab is hoping to build. On my numbers Rocket Lab’s price is further above its value than SpaceX’s, with less of the business already in hand. The odd one is Iridium itself. At $44.91, an Iridium share is $27 of cash after closing plus 0.4 of a Rocket Lab share, worth $48.89 together at today’s prices, 8.9% more than it costs C (calculated).²⁸⁴ That gap is what the market charges for the wait and the risk the deal fails. It also means Iridium’s holders are now, for most of their money, holders of cash.

Quality and price, separately

How good is the business? Better than most small space companies: it launches reliably, it wins government work, its parts sell to rivals, and its founder is still in charge with a large stake. Not yet good in the sense of earning more than it costs, and it has never had a profitable year. How good is the price? On every case I can build, poor. This looks like a good company at a price that has already paid for a great one.

How the odds multiply

The case for the price needs several things to go right together. My guesses at each are in the table. They are not independent, since a Neutron that flies early also helps margins and cash, so the true chance of all five is somewhat higher than the product. But each step looks likely on its own, and the product is about 12%.

Where this could be in 5 and 10 years

For my base to be right at five years, Neutron has to fly 11 times in 2031 and Rocket Lab on its own has to make $73M of owner cash E (estimate). Iridium has to deliver 95% of its forecast through its satellite replacement. It is right at ten years if 2036 revenue is $6.2B and Rocket Lab’s owner cash is $438M on 22 flights E (estimate). The value rises from $9.7 today because the cash comes nearer, not because I add anything. About 60% of it is Iridium at both dates C (calculated).

The cases differ on Neutron, margin and capital. In the bear Neutron never flies more than six times a year, the operating margin is 0% in 2035, and Rocket Lab alone uses cash until 2038. Iridium is nearly all of the $7.8. In the bull Neutron flies 22 times in 2031 and 43 in 2036, and the margin reaches 29% in 2035. At 10% for Rocket Lab my base today is $12.0.

The most likely way my base is wrong is Neutron. If reuse is slow, flights and margin come in lower and the five-year value moves toward the bear’s $4.8. Today’s price, $54.73, is about what my bull is worth in October 2036.

These are estimates of value, not forecasts of the share price. The market price can sit above or below value for years.

VIIThe case for the price

What most people miss

Three things cut in Rocket Lab’s favour and rarely come up. First, the collar now works for Rocket Lab. Below $67.50 the exchange ratio is fixed at 0.4000, so at $54.73 it pays $48.89 an Iridium share, not $54, about $0.54B less, and each $1 fall in its own shares cuts the price by another $42M C (calculated).⁴⁶ Second, it sold stock when it was dear: 8.15M shares at about $131 in the second quarter, near the top.² The deal and Neutron are paid for without going back to the market E (estimate). Third, HASTE flights under the new Space Force contract are worth $14.8M to $22.2M each, well above an ordinary Electron launch.²¹⁴

The bull case

In plain words: launch is short of capacity, SpaceX is moving its effort to Starship, and governments want a second supplier that can build and fly a whole mission. Rocket Lab says it is the only other company that does both, and with Iridium it adds spectrum and recurring revenue. Beck’s version is that the space companies that last will build their own satellites and fly them on their own rockets.¹¹

Holders say it with money more than words, though not in a straight line. ARK held 1,631,207 shares at 30 June, down from 2,243,656 at 31 March.³⁵ Since then its daily trade notices show purchases of about 2.09M shares across ARKK, ARKQ and ARKX between 28 July and 15 October, including 168,633 shares on 15 October, the day after the Neutron delay, which the Motley Fool put at about $9.3M.⁴¹³⁶ ARK’s own site refused my request, so I read those notices through arkfunds.io, a third-party copy; its figures for 22 September and 1 October match the Fool’s. At 31 July two of its funds, the robotics and the space ETFs, held 960,577 and 554,056 shares.³⁷ I could not find a published ARK model or price target for Rocket Lab, so I cite none. On the sell side, Citizens cut its target to $90 from $130 and KeyBanc to $100 from $135, and KeyBanc cited one fewer paid Neutron launch in 2027. Both are as reported; I could not open either note.³⁸³⁹ Not every holder agrees. Baillie Gifford cut its holding from 18.4M shares to 10.4M in the second quarter.³⁵

Against reality

Today, space systems is growing fast, $189.5M in the second quarter against $97.9M a year earlier, partly from acquisitions.² Launch revenue fell slightly. Neutron has not flown. If Neutron reaches orbit in 2027, flies 20 times a year by 2035, and space systems keeps growing above 15% to 2031, my base is possible: $10 a share. The price needs that whole path 2.7 times larger C (calculated). That is the distance between today’s numbers and the case.

What a 10x would take. Ten times $54.73 is $547, about $403B of market value. At 25 times owner cash, that needs about $16B a year. At a 20% owner margin, far above anything Rocket Lab has earned, that is about $81B of revenue, 2.5 times SpaceX’s today.⁸ By 2036 it means revenue growing about 56% a year for ten years from about $1B C (calculated). From a starting value near $40B it has been done. NVIDIA’s shares rose 115 times and Tesla’s 30 times in the ten years to Q4 2026, from market values of about $38B and $30B C (calculated).⁴⁰ Those are the decade’s famous exceptions. For Rocket Lab from here, tenfold is close to impossible, and I would not build a case on it.

Where I come down

Beck giving up his pay moved me, and so did the timing of the share sales: this is a management that knows what its stock is worth to others. The targets did not, because none I could see reconcile with cash. A Neutron that reaches orbit in 2027, lands its first stage and books a second year of customer flights would raise my values most, though on my numbers not to the price.

VIIIRisks, and what would change my view

The three ways this goes badly wrong are at the start of Valuation. These are the rest.

• One customer. A government customer was 42% of first-half revenue.² A budget change, a cancelled tranche or a lost competition would show up quickly.
• The deal can still break. FCC consent and some foreign approvals are outstanding, and the end date is 28 June 2027, extendable to 28 December 2027.⁴ SpaceX has asked the FCC to weigh Iridium’s conduct toward rivals, as reported.²⁵ If the deal fails, Rocket Lab keeps the cash it raised, and my base without Iridium is $9.
• Integration. Iridium is larger by revenue than Rocket Lab and runs a safety-of-life network. Rocket Lab has never run one.¹¹ Iridium’s term loan rate rises after closing, to SOFR plus 2.50% to 3.00%.²³
• Launch failure. Electron has failed before, and a failure grounds a rocket while the cause is found. A Neutron failure on an early flight would cost a year.³
• Contracts. MDA may claim liquidated damages on 17 late satellite buses, an amount the company cannot yet estimate.² Three launch customers owe Rocket Lab money under loans made to win their business.²
• Dilution. If Neutron slips again, the losses run longer, and the money comes from new shares.²
• Key person. The 10-Q lists retaining Beck among its risks.² The company is built around him.