How Rocket Lab Outperformed Billionaire Elon Musk’s Space Company in the First Quarter

rocket lab (RKLB) Stocks are being ripped apart. Last week Rocket Lab announced:

• A $32 million U.S. Space Force contract to place the “VICTUS HAZE Tactical Reactive Space” satellite into orbit.
• Another Space Force contract to launch DISKSat into very low Earth orbit for $14.5 million.
• For the first time ever, we plan to reuse one of our Electron first stage rockets in an orbital launch.

You might not guess it from the stock price (down 13% since the end of March), but all of the above follows Rocket Lab’s announcement that it launched its 46th successful mission last March and plans to launch its 47th later. In April. As Rocket Lab prepares to report its first quarter 2024 financial results on May 6, the company is clearly gaining some momentum. But the truth is much bigger than that. Rocket Lab is now growing faster than SpaceX.

Rocket Lab’s Electron Rocket before launch. Image credit: Rocket Lab, photographer Kieran Fanning.

Eat your heart out, Elon Musk

SpaceX, the pioneering space company founded by billionaire Elon Musk, has been setting the standard for the rapid growth of space stocks for nearly a decade. In 2023, SpaceX launched a total of 98 times, including two Starship test flights. We plan to launch 144 rockets in 2024, a 47% growth from the previous year.

By contrast, the tiny Rocket Lab flew just nine successful Electron missions last year. It’s not even in the same league as SpaceX yet. However, in the first quarter of 2024 alone, Rocket Lab launched four times. At the current pace, rocket companies could easily make 16 launches this year, a 77% growth over 2023.

For Musk, this comparison may be disappointing. Ultimately, to achieve its goal of 144 launches this year, SpaceX actually must We plan to launch approximately 36 missions per quarter, but managed “only” 32 in the first quarter.

Don’t cry over SpaceX

None of this is a knock on SpaceX. According to the latest global rocket launch tally compiled by our friends at Payload Research, SpaceX launched more frequently than any other launcher in the world last quarter. Not only does SpaceX carry 8 times more payload (and much more); bigger SpaceX has launched twice as many rockets into orbit as Rocket Lab than China and 16 times more than India, and 32 times faster than its one-time rival United Launch Alliance.

In fact, add up all the rocket launches by different launch providers around the world. ~ no Named SpaceX last quarter (31 total launches), SpaceX still launched more than many (32 launches).

Should you buy Rocket Lab stock?

Nonetheless, SpaceX remains a private company and not one that most investors can invest in. (Although there is a way…) On the other hand, Rocket Lab is a listed stock. is Something you can invest in.

But should we?

This isn’t really a question of launch flow, but rather a question of how patient investors are. No matter how quickly Rocket Lab increases its launch rate, the company still isn’t making much money from rocket launches, and probably never will.

Only Rocket Lab (eventually) achieved gross profit in its launch services business in 2023, with a gross margin of 11.3%. However, both operating profit and launch net profit were in deficit.

Unless Rocket Lab’s long-awaited “Neutron” launch vehicle changes the company’s spaceflight economics, Rocket Lab’s best chance of profit in the future may be a much faster-growing and more profitable space system focused on building spacecraft components. It’s in business. , satellites and other spacecraft. Despite the undeniable hot appeal of honest rocket launches, with sales growing 82-fold over the past three years and gross profit margins reaching 25%, space system It’s more likely to be a revenue driver for Rocket Lab going forward.

But even if Space Systems grows as expected, most analysts agree that Rocket Lab’s first net earnings probably won’t arrive until 2026, and probably won’t be more than $0.09 per share even then. With a value 40 times its value very Future returns (profits that may be earned but may not be earned), unfortunately Rocket Lab stock remains a speculative bet on space stocks.

Invest only if you are very patient and have a lot of tolerance for the risk that your bets may not pay off at all.