Rocket Lab (RKLB) had a great run in 2024. After hitting a quintuple bottom at $3.47 in April 2024, it broke out of a three year bear-market and rallied 690% to $27.44 last Friday, at 12.3 billion market cap. While the rocketing stock price seems too hot to touch, the stock is just getting started.
* Electron rocket has solidified its reputation in the industry. There are only three companies capable of reusable rockets: SpaceX, Rocket Lab, Blue Origin.
* Neutron is going to be the true challenger to Falcon 9, this year's maiden launch is major catalyst for the stock.
* RKLB is vertically integrated space company, capable of satellite manufacturing, rocket launch, and space system support. Rocket launch contributes only 30% of the company revenue, most of which come from space system.
# Electron Rocket
The small **reusable** rocket carved a niche market out of Falcon 9. Electron cost 7.5 million (now raised to 8.5 million) per launch with 300 kg payload. Falcon 9 cost $70 million with 23 tons payload. While the cost-per-kilo is obviously worse for Electron, it is a commonly misunderstood metric. You don't buy a piece of the rocket by multiply cost-per-kilo with your payload weight. You either buy the whole rocket, or ride-share with other passengers. Electron is like UberX, you book it at anytime, go anywhere, depart anytime, and reschedule as you wish. Falcon9 is like carpool. You wait for all the passengers to get onboard, and only leave at a time when it works for everyone.
Electron has [16 launches in 2024](https://www.rocketlabusa.com/missions/missions-launched/) with 100% success rate. Notably it launched two missions within 24 hours on Nov 24 and 25, on its **two private-owned spaceports** in New Zealand and USA. Booking an Electron rocket is easy as booking UberX for space.
https://preview.redd.it/a5tu81w04aie1.png?width=1376&format=png&auto=webp&s=ebd10344389bda651c69eaf96a9849d166c76059
# Neutron Rocket
Everyone knows about Electron at this point. If RKLB were just about Electron, it would be insanely overvalued now. But few people understand the Neutron yet. This is a mid-lift rocket comparable to Falcon 9. When it was first announced, it was scoffed at for its dull resemblance to Falcon 9. Then something amazing happened. Neutron design morphed into a **fat, black, sexy dildo shape**. While its competitors are still playing catch up game to Falcon 9, Neutron has been redesigned from first principles, and ready to shock the space industry.
>It's a rocket from 2050. – Rocket Lab CEO, Peter Beck
[The \\"unexciting\\" competitors to Falcon 9](https://preview.redd.it/ys7qsv4ky9ie1.png?width=3070&format=png&auto=webp&s=3c3e00d7f7516140655f36f57d8d1ca52378cec6)
[Neutron design: before vs after](https://preview.redd.it/udf1ig5xu9ie1.png?width=1024&format=png&auto=webp&s=7820434a993364e5029010fbd5d1b62d7970635c)
***Second Stage Rocket Redesign***
Unlike its competitors which stack second stage rocket on top of the first stage. The second stage rocket is placed inside the first stage. The tip of the rocket (fairing) opens up like a hippo mouth to spit out the second stage rocket. It comes with 3 advantages:
* The second stage is protected from aerodynamic forces. So the second stage doesn't have to be aerodynamic. It can be any shape you like.
* The second stage is protected by the fairings, which are permanently attached to the rocket Unlike Falcon 9 which discards the fairings, Neutron designed its fairing to be an integral part of the rocket for rapid reuse.
* Because other rockets place the second stage on top of first stage. The second stage is subject to compression force as the rocket goes up. Neutron "hangs" the second stage inside, pulling the second stage upload. What difference does this make: Neutron carbon fiber is much stronger under tension than compression. This makes the second stage much simpler and more fuel-efficient (Rocket Lab is the carbon fiber alchemist, capable of 3D printing 1 meter of carbon fiber structure per minute).
I took the summary from the video [Who wins the reusability race](https://youtu.be/Ynebk_71sxM?si=oIw-miQnUnPleC_I&t=480). It's an in-depth video that every RKLB investor should watch.
[Second Stage Rocket Inside First Stage](https://preview.redd.it/2d902981z9ie1.png?width=2398&format=png&auto=webp&s=547e4164fb723cd4583ca6fe4bcdba0f0fdf1c8d)
[Neutron \\"Hungry Hippo\\" Fairing](https://preview.redd.it/3mp8l5tj6aie1.png?width=1982&format=png&auto=webp&s=ddb7a0dbd49c4d1f94edc2f5252f8bb20dadfdda)
**iPhone Moment**
When Neutron hits the market, it will be the iPhone moment of Space. We have seen enough homogenous looking rockets stacking on stage on another, with more and more fuels. Neutron achieves better reusability (fairing) and fuel efficiency through radical redesign. It is built from first principle, ignoring what everyone else has been doing.
This is not the only trait that reminds me of Apple. The radical redesign is like Apples "think different." RKLB's obsession with vertical integration reminds me of how Apple obsesses with user experience. The clean, minimalistic design of the rocket and the launch pad stands in stark contrast to other rockets which must launch with wired "ICU" life-support tower. Neutron is designed to launch and land on its own, without any fancy structure on the ground.
[Electron launch](https://preview.redd.it/jynjk528aaie1.png?width=1686&format=png&auto=webp&s=c5076fdba6aeec0a6d4e947def84950787b98762)
**Engineering Excellence**
The market has not priced in Neutron success. It's first flight was supposed to happen in 2024 but due to 2025. Delay sucks but it's not uncommon. The delay also means catalyst is still ahead of us. Will Neutron succeed on its first try? Elon Musk intentionally kept SpaceX private in order to shield from public pressure. SpaceX blew up rockets and burned R&D cash with abandon. Rocket Lab does not have such luxury. It is under immense pressure to deliver. Their engineering record is stellar. Rocket Lab's Electron cost 100M R&D to get to orbit and plan to spend just 300M on Neutron. Falcon rockets cost \~5B in R&D.
https://preview.redd.it/tw8b8uon4aie1.png?width=1360&format=png&auto=webp&s=7e7c3273dc2bb35fa3726e908dd45028a0f4ca4c
# Other DD
**Survival of the fittest:** The three year bear market hit space industry hard. The weak competitors have been shaken out. Virgin Galactic and Momentus stock prices are in the toilet. Virgin Orbit has gone bankrupt. Astra Space has been taken private after 99% stock crash. The survivors of the bear markets are the fittest.
**Political tailwind:** With Orange man in the House, Elon Musk as his cheerleader, and Nasa new chief, we are entering a very favorable 4-year term for the space industry.
**About SpaceX**: I can only say, space is BIG. It's more than enough for one company to thrive. The political neutrality of RKLB could be an advantage over SpaceX, as Elon's SpaceX is sure to run into issues with his political enemies.
**Cathie Wood** sold 70,252 shares of RKLB in ARKQ and ARKX fund. What can I say? - bullish 🚀
**Jim Cramer** does NOT recommend buying. On Nov 24 last year: "'It's Not A Bad Company By Any Means, But It Is Up 305%'.". The stock was $24 back then. - more bullish 🚀
# Price Target
With SpaceX valued at 350 billion in **private market**, Rocket Lab 12.3 billion market cap is chump change. I expect Rocket Lab to deliver Neutron, and continue its track record of engineering excellence. **A conservative 1/10 valuation of SpaceX would place RKLB at 35 billion, or $78 per share.** But I expect the share price to go much higher than that after Neutron hit the market and everyone realizes what a genius 🚀 it is.
Bears can bash me with their price-to-sales ratio and other financial metrics. I can only say, that's now how you value 🚀🚀🚀.
# Position
Brokerage account: 5000 shares, 10 leap spread strike $15/$50 expiring Jan 2026
https://preview.redd.it/dsdsi8dm8aie1.png?width=3234&format=png&auto=webp&s=d5e7414f73b1db732adc437c9b917a33a79f340a
IRA 1: 2000 shares
https://preview.redd.it/cpqewgep8aie1.png?width=3282&format=png&auto=webp&s=3802a8e869aac3983bf2153c6690bc38b0df35ee
IRA 2: 908 shares
https://preview.redd.it/oyqknxg78aie1.png?width=3208&format=png&auto=webp&s=bf02b1181afe48d91e694788ef4d06f3b0557c71
Merchandise: poster, bottle, T-shirt
https://preview.redd.it/ol9g97658aie1.png?width=1358&format=png&auto=webp&s=6bb6c9c62f99a01f04625133970eadb7d98d511d