As more and more satellites go up, delivering packages in space has become a major industry. Many players exist in this space, but most remain private companies that are working to find their place. Even Elon Musk’s SpaceX appears years away from any IPO.
But on May 2, Rocket Lab United States (RKLB -4.96%) completed There and Back Again, a successful mission to test his methods of recovering reusable Electron rockets and helicopters. As the company continues to grow and deliver since its November 2020 IPO, here’s why Rocket Lab may have what it takes to become a definitive force in space logistics in the future.
Space is big business
Space has become a growth industry, hitting $424 billion in 2020 on track for a $1 trillion valuation by 2040. As companies like SpaceX’s Starlink deploy satellites to create networks of constellation to provide internet services, many other organizations send data recovery, GPS and service devices on a regular basis.
As space services continue to grow, someone has to get these devices in place. Rocket Lab announces 26 successful launches with its Electron launch vehicle, deploying more than 146 satellites. Nor is the Electron the only tool in its box. Rocket Lab has the Photon deployable space vehicle for managing already placed satellites, and it is working in partnership with NASA on the CAPSTONE satellite, innovating new methods of orbiting and engineering satellites.
The power of reusable rockets
The successful development of reusable rockets only strengthens the case for Rocket Labs. Reusable modules and rockets offer a huge advantage in space delivery turnaround time. Rocket Lab CEO Peter Beck said securing an additional rocket launch offers a “fantastic” way to double the company’s rocket production without additional capital investment.
Deploying satellites provides Rocket Lab’s proverbial bread and butter, and the company has edged closer to profitability in recent reports, most recently posting a net loss of $0.06 per share in the second quarter of 2022.
There are plans for even more Rocket Lab service options on the horizon. Many companies, including SpaceX, rely heavily on government contracts for space R&D, and the US Space Force last year awarded Rocket Lab a $24 million contract to develop the upper stage of the Neutron vehicle. . The eight-ton payload vehicle can carry the heaviest loads and leave the planet’s atmosphere and orbit entirely. Reaching for the moon is no longer out of the question.
The challenges of the final frontier
Space remains a risky business, and high-profile test failures could erode public confidence in the company just as easily as successes can build hype. There and back was not entirely a hobbit’s vacation. The supposedly reusable module was dropped in salt water by the recovery helicopter and needs to be refurbished. But SpaceX’s own headline-grabbing rocket crashes have helped the public understand that failures and complications are a necessary part of the testing process.
A major competitor could emerge, but it probably won’t be SpaceX. The latter company’s IPO still seems years away due to government contracts and its own Mars mission taking precedence over such measures. Most other space logistics providers don’t have the reusable launch vehicles and diverse toolbox available to Rocket Lab.
Space trucking may not have the power to put celebrities into orbit, like SpaceX has, but it’s likely to continue to be a necessary part of logistics in the future. This lack of “star appeal” may well explain why Rocket Lab’s stock price has fallen 50% since its IPO. Big news might offer short-term spikes in this price, but Rocket Lab is here for the long haul and has the tools to deliver over time.
Enter before the big boom
The current Rocket Lab stock price appears low, given its recent developments and the knowledge that space logistics will almost surely continue to grow as an industry. Investing in satellite delivery and possible repositioning costs can be less risky than betting on specific satellite manufacturers or service providers.
An investment by the US Space Force in a company less than two years from its IPO is a strong signal of confidence. Look for larger investments as development of the Neutron rocket continues, which could signal continued strength. With stock prices at or near historic lows as the world recovers from the woes of the pandemic and grapples with fuel and logistics shortages, now may be the time for investors in space stocks to bet on the future, on space and on Rocket Lab USA.