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Rocket Lab stock analysis. Ticker: $RKLB

Rocket Lab is an end to end space company that builds and launches rockets, satellites and space systems. Shares have fallen over 60% since the company joined the public markets giving the company a current market value of 1.87 billion. With just over 300 million of cash and investments and 100 million of debt the enterprise value is 1.65 billion.

That seems low considering Elon Musk’s SpaceX was recently valued at $180 billion in a private transaction. But Rocket Lab stock is considerably smaller than its rival. Bloomberg thinks SpaceX probably booked 9 billion dollars of revenue last year, a much higher figure than Rocket Lab’s 245 million.

And Rocket Lab is also a long way from profitability. Net loss in 2023 was 183 million and free cash flow was negative 154 million. Even adjusted EBITDA, the most favorable metric possible was negative 91 million. Management said on the latest earnings call that adjusted ebitda will continue to be negative throughout 2024 and is unlikely to turn positive until Rocket Lab’s newest rocket Neutron is fully operational. That could happen towards the end of 2024 according to Rocket Lab CEO Peter Beck.

Despite the weak fundamentals, Rocket Lab stock clearly presents an intriguing opportunity. The company says its launch services have a total addressable market around 15 billion while its space systems have a tam around 25 billion. The big money, however, is in services.

Beck says the vast majority of value will come from providing services from space, similar to what SpaceX is achieving with Starlink. It’s this segment that could one day have a total addressable market in excess of one trillion dollars.

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