Author Topic: Rocket Lab to go public, develop new vehicle (financial discussion)  (Read 72074 times)

Offline gongora

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[WSJ] Rocket Lab Nears Deal to Merge With Vector SPAC
Deal, which could be completed by Monday, would take Rocket Lab public, valuing it at $4.1 billion, sources say



https://twitter.com/jeff_foust/status/1366202932924973063
Quote
The article says that Rocket Lab would use the proceeds to fund development a larger vehicle, called Neutron, that would be used for megaconstellations. (The company hadn’t shown interest before in a vehicle larger than Electron.)
« Last Edit: 02/28/2024 06:52 pm by gongora »

Offline Redclaws

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Re: Rocket Lab to go public, develop new vehicle
« Reply #1 on: 03/01/2021 01:11 am »
Woah!  That’s extremely big news for Rocket Lab.(!)

Online M.E.T.

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Re: Rocket Lab to go public, develop new vehicle
« Reply #2 on: 03/01/2021 01:15 am »
Boggles the mind. FOMO-driven space investors going wild, living in a parallel universe where Starship does not exist.

Just to recoup a $4B investment you need after-tax profits of at least $4B. If Electron earns $1M net profit per launch (15% of launch price), that’s 4000 Electron launches.

At even 100 launches per year, that’s 40 years to earn back the $4B. And that’s ignoring time value of money or any reasonable annual return on investment. If you take that into account, you’re probably looking at 100 years.

As for the new, larger launch vehicle. How much larger can you go in a world where both F9 and Starship exists?

Just how informed is the space investment market? “Not very”, seems to be the answer.
« Last Edit: 03/01/2021 01:35 am by M.E.T. »

Offline friendly3

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Re: Rocket Lab to go public, develop new vehicle
« Reply #3 on: 03/01/2021 01:38 am »
Boggles the mind. FOMO-driven space investors going wild, living in a parallel universe where Starship does not exist.

Just to recoup a $4B investment you need after-tax profits of at least $4B. If Electron earns $1M net profit per launch (15% of launch price), that’s 4000 Electron launches.

At even 100 launches per year, that’s 40 years to earn back the $4B. And that’s ignoring time value of money or any reasonable annual return on investment. If you take that into account, you’re probably looking at 100 years.

As for the new, larger launch vehicle. How much larger can you go in a world where both F9 and Starship exists?

Just how informed is the space investment market? “Not very”, seems to be the answer.

Nobody is investing $4B, the article simply says that going public will allow them to raise $470M and will value the company at $4.1B.
« Last Edit: 03/01/2021 01:41 am by friendly3 »

Offline ncb1397

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Re: Rocket Lab to go public, develop new vehicle
« Reply #4 on: 03/01/2021 02:08 am »
Peter Beck is running out of hats.

Online M.E.T.

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Re: Rocket Lab to go public, develop new vehicle
« Reply #5 on: 03/01/2021 02:13 am »
Boggles the mind. FOMO-driven space investors going wild, living in a parallel universe where Starship does not exist.

Just to recoup a $4B investment you need after-tax profits of at least $4B. If Electron earns $1M net profit per launch (15% of launch price), that’s 4000 Electron launches.

At even 100 launches per year, that’s 40 years to earn back the $4B. And that’s ignoring time value of money or any reasonable annual return on investment. If you take that into account, you’re probably looking at 100 years.

As for the new, larger launch vehicle. How much larger can you go in a world where both F9 and Starship exists?

Just how informed is the space investment market? “Not very”, seems to be the answer.

Nobody is investing $4B, the article simply says that going public will allow them to raise $470M and will value the company at $4.1B.

Yes, the $470M therefore got the new investors just over 10% of the company. And if someone wanted to buy the entire company, they would need to fork out $4.1B.

Implying that the discounted future cash flows of the company is worth $4.1B. The absurdity of which I tried to demonstrate in my post above.

Online M.E.T.

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Re: Rocket Lab to go public, develop new vehicle
« Reply #6 on: 03/01/2021 02:16 am »
Peter Beck is running out of hats.

Indeed. It would seem that the trajectory is converging on exactly what Elon asserted from the start when asked about the viability of smallsat launchers. Namely that reusability is fundamental to the launch business of the future, and reusability grows more efficient the larger the launch vehicle.



Offline Redclaws

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Re: Rocket Lab to go public, develop new vehicle
« Reply #7 on: 03/01/2021 03:05 am »
Peter Beck is running out of hats.

Indeed. It would seem that the trajectory is converging on exactly what Elon asserted from the start when asked about the viability of smallsat launchers. Namely that reusability is fundamental to the launch business of the future, and reusability grows more efficient the larger the launch vehicle.

And if that’s indeed the case - I largely agree - then Rocket Lab is further, technologically, towards orbital booster reuse than anyone else except SpaceX or perhaps Blue.  (I see them as further than Blue, though Blue is aiming so much larger.)

A sufficiently large booster will need a different landing technique, but still - unless you think there’s room in the world for only one independent commercial launch provider, I think Rocket Lab is better placed to be at least somewhat competitive with SpaceX than just about anyone.

Exciting times.

Offline DreamyPickle

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Re: Rocket Lab to go public, develop new vehicle
« Reply #8 on: 03/01/2021 03:06 am »
Quote
Rocket Lab is expected to use proceeds from the deal to fund development of a medium-lift “Neutron” launch vehicle tailored for use in satellite mega-constellations, space missions and commercial spaceflight, the people said. The Neutron rocket is expected to be able to lift most satellites forecast to launch in the coming years and be positioned as a lower-cost alternative to larger vehicles, they said.
This is amazing news.

I wonder if "most satellites" includes the GTO market or just LEO mega-constellations? The latter cares about cost much more than performance.

Offline ncb1397

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Re: Rocket Lab to go public, develop new vehicle
« Reply #9 on: 03/01/2021 03:06 am »
Boggles the mind. FOMO-driven space investors going wild, living in a parallel universe where Starship does not exist.

Just to recoup a $4B investment you need after-tax profits of at least $4B. If Electron earns $1M net profit per launch (15% of launch price), that’s 4000 Electron launches.

At even 100 launches per year, that’s 40 years to earn back the $4B. And that’s ignoring time value of money or any reasonable annual return on investment. If you take that into account, you’re probably looking at 100 years.

As for the new, larger launch vehicle. How much larger can you go in a world where both F9 and Starship exists?

Just how informed is the space investment market? “Not very”, seems to be the answer.

Just compare it to Tesla. They launched 7 times in 2020. Assuming 10% net earnings on revenue (WAG), and $7 million per electron launch, they made $4.9 million last year. A market cap of $4,100 million would therefore be a 836x P/E ratio. Tesla is trading at 1060x. SpaceX P/E may be similar or worse. Both are based on growing into their market capitalization, not current earnings but RocketLab wouldn't be a megacap stock at that valuation so doing so is a bit easier (more plausible).
« Last Edit: 03/01/2021 03:10 am by ncb1397 »

Offline GWH

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Re: Rocket Lab to go public, develop new vehicle
« Reply #10 on: 03/01/2021 03:14 am »
How about they just were valued at a number within 10% of what Lockheed offered for Aerojet Rocketdyne?

Online M.E.T.

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Re: Rocket Lab to go public, develop new vehicle
« Reply #11 on: 03/01/2021 03:14 am »
Boggles the mind. FOMO-driven space investors going wild, living in a parallel universe where Starship does not exist.

Just to recoup a $4B investment you need after-tax profits of at least $4B. If Electron earns $1M net profit per launch (15% of launch price), that’s 4000 Electron launches.

At even 100 launches per year, that’s 40 years to earn back the $4B. And that’s ignoring time value of money or any reasonable annual return on investment. If you take that into account, you’re probably looking at 100 years.

As for the new, larger launch vehicle. How much larger can you go in a world where both F9 and Starship exists?

Just how informed is the space investment market? “Not very”, seems to be the answer.

Just compare it to Tesla. They launched 7 times in 2020. Assuming 10% net earnings on revenue (WAG), and $7 million per electron launch, they made $4.9 million last year. A market cap of $4,100 million would therefore be a 836x P/E ratio. Tesla is trading at 1060x. SpaceX P/E may be similar or worse. Both are based on growing into their market capitalization, not current earnings but RocketLab wouldn't be a megacap stock at that valuation so doing so is a bit easier (more plausible).

I was waiting for that retort. The fundamental difference being that the companies you mentioned are priced for massive growth, whereas Rocketlab has a limited growth potential with SpaceX imposing a hard ceiling in the market - a ceiling that is inexorably descending ever lower for a competitor like Rocketlab as Starship approaches operations.


Offline Stan-1967

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Re: Rocket Lab to go public, develop new vehicle
« Reply #12 on: 03/01/2021 03:15 am »
Peter Beck is running out of hats.

Indeed. It would seem that the trajectory is converging on exactly what Elon asserted from the start when asked about the viability of smallsat launchers. Namely that reusability is fundamental to the launch business of the future, and reusability grows more efficient the larger the launch vehicle.

If RocketLab pivots away from developing re-use on Electron to pursue this new re-usable Neutron vehicle, it will be a good read of his true thoughts on the smallsat market.   

Offline DreamyPickle

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Re: Rocket Lab to go public, develop new vehicle
« Reply #13 on: 03/01/2021 03:48 am »
Companies are not values only on their past returns but future potential.

SpaceX has demonstrated that reusability is technically viable and the mega-constellation boom is providing a market for cheap launch. There is room for a second provider of cheap LEO launches and RocketLab has an excellent shot at this.

Despite plenty of funding and institutional knowledge competitors like Blue Origin, ULA and ArianeSpace are moving very slowly, if at all. Right now OneWeb is launching with Soyuz because it's the cheapest option that is not also directly funding a competitor, surely we would be able to beat Soviet designs in 2021?

Online M.E.T.

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Re: Rocket Lab to go public, develop new vehicle
« Reply #14 on: 03/01/2021 04:04 am »
Companies are not values only on their past returns but future potential.

SpaceX has demonstrated that reusability is technically viable and the mega-constellation boom is providing a market for cheap launch. There is room for a second provider of cheap LEO launches and RocketLab has an excellent shot at this.

Despite plenty of funding and institutional knowledge competitors like Blue Origin, ULA and ArianeSpace are moving very slowly, if at all. Right now OneWeb is launching with Soyuz because it's the cheapest option that is not also directly funding a competitor, surely we would be able to beat Soviet designs in 2021?

Well, I think you have touched on the one factor which might hold some potential for Rocketlab. Namely a bet that there will be a significant number of satellite operators who will refuse to launch on SpaceX irrespective of price - due to them being rivals in the space internet business.

If that pans out, then once again we have a situation where less competitive launch providers are made viable thanks to an artificial market not governed by price alone, but protected by strategic commercial interests (as opposed to strategic political interests at the moment).

Whether that holds true once Starship is able to launch 400 satellites at once for $20M, well, that remains to be seen.

But protected markets aside, the prospects for another medium launch vehicle look pretty bleak in the open market.
« Last Edit: 03/01/2021 04:14 am by M.E.T. »

Offline freddo411

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Re: Rocket Lab to go public, develop new vehicle
« Reply #15 on: 03/01/2021 04:14 am »
Boggles the mind. FOMO-driven space investors going wild, living in a parallel universe where Starship does not exist.

Just to recoup a $4B investment you need after-tax profits of at least $4B. If Electron earns $1M net profit per launch (15% of launch price), that’s 4000 Electron launches.

At even 100 launches per year, that’s 40 years to earn back the $4B. And that’s ignoring time value of money or any reasonable annual return on investment. If you take that into account, you’re probably looking at 100 years.

As for the new, larger launch vehicle. How much larger can you go in a world where both F9 and Starship exists?

Just how informed is the space investment market? “Not very”, seems to be the answer.


I'm very bearish on investing in launch companies (exceptions: SX and Blue and RL).  You didn't even mention the heavy over investment and over development in the sector, not to mention the competition for customers.

RL might be an exception because:

* They are flying
* They've got a team that demonstrably knows how to build working hardware
* If anyone wants to deploy a constellation to compete with SL, it will want to fly on non-SX launchers.
« Last Edit: 03/01/2021 04:14 am by freddo411 »

Offline Lars-J

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Re: Rocket Lab to go public, develop new vehicle
« Reply #16 on: 03/01/2021 05:53 am »
Peter Beck is running out of hats.
Indeed. This (a larger launch vehicle) was another thing Peter Beck said he would not do.

Offline FutureSpaceTourist

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Re: Rocket Lab to go public, develop new vehicle
« Reply #17 on: 03/01/2021 06:40 am »
Here’s the WSJ article bit on Neutron:

Quote
Rocket Lab is ex­pected to use pro­ceeds from the deal to fund de­vel­op­ment of a medium-lift “Neu­tron” launch ve­hi­cle tai­lored for use in satel­lite mega-con­stel­la­tions, space mis­sions and com­mer­cial space­flight, the peo­ple said. The Neu­tron rocket is ex­pected to be able to lift most satel­lites fore­cast to launch in the com­ing years and be po­si­tioned as a lower-cost al­ter­na­tive to larger ve­hi­cles, they said.

Offline Steven Pietrobon

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Re: Rocket Lab to go public, develop new vehicle
« Reply #18 on: 03/01/2021 07:13 am »
I would have that Muon would have been a better name for a medium size launch vehicle, but what do I know!

https://en.wikipedia.org/wiki/Muon
Akin's Laws of Spacecraft Design #1:  Engineering is done with numbers.  Analysis without numbers is only an opinion.

Offline Vultur

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Re: Rocket Lab to go public, develop new vehicle
« Reply #19 on: 03/01/2021 07:29 am »
Boggles the mind. FOMO-driven space investors going wild, living in a parallel universe where Starship does not exist.

Starship still could fail (economically, that is; at this point something very weird would have to happen for it never to fly into space at all, IMO).

Raptor is a pretty ambitious engine, far more so than SpaceX's other engines; it's possible that it will be a huge maintenance/reliability issue and quick cheap Starship reuse won't happen.

It's not the way I would bet, but I don't think it's crazy.

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