Pushing above the crowds

Rocket Lab is gearing up for its US$4.1 billion ($5.7b) Nasdaq listing during the second quarter, through which it will raise US$750m — much of it earmarked to fund a larger medium-lift rocket, the Neutron, due to blast off in 2024. Rocket Lab founder and chief executive Peter Beck this week revealed details of the giant new rocket and said it was an exciting time for the company. “We’ve been on this path for a while, and it’s great to finally bring Rocket Lab to the public.” But like anything to do with space, there are plenty of uncertainties out there. Here are three potential fishooks to the company’s future growth plans, writes Chris Keall

1 The satellite launch industry is overcrowded

In a survey of the industry last month, the Wall Street Journal counted a “glut” of more than 100 small satellite launch ventures, fuelled by a “bubble” of US$15.7b of venture capital.

The good news: There are a whole lot of satellites to launch now, and more on the way. Some 1200 satellites reached orbit last year, with more than 10,000 expected over the next decade. In comparison, about 400 small commercial satellites launched between 2015 and 2018, it said.

The bad news: That’s not nearly enough to sustain the current number of contenders, say experts canvassed by WSJ.

“Only a few will survive,” it says.

Happily, for Rocket Lab, the Journal named it as one of three promising contenders in the crowded field, along with Sir Richard Branson’s Virgin Orbit (not to be confused with his space-tourism startup, Virgin Galactic) and Astra Space, financed by US tech and telco billionaire Craig McCaw.

On Tuesday, Beck’s response was: Others are raising funds and tooling around with prototypes, while his company’s 18m tall Electron has had 18 launches since 2017, ferrying 97 small satellites into space.

“There’s only been one other company [Virgin Orbit] that’s had one successful test flight,” Beck said.

“We’ve always been the first mover and we like being a first mover, and continue to be the first mover into this new medium class, which we think ultimately is where the market is going to go.”

2 Going head-to-head with Elon

The first Electron launches took 150kg payloads into low-Earth orbit.

Recently, it’s upped the ante to 300kg. But the 40m tall Neutron will be able to handle a manifest of close to eight tonnes (8000kg).

That will put Rocket Lab — the reigning champ of featherweight launches — into the welterweight class currently dominated by Elon Musk’s SpaceX (in terms of private launches; Russia and China’s space agencies staged the two busiest space launches overall last year, followed by SpaceX in third, Rocket Lab in fourth, the EU in fifth and Japan sixth).

A Rocket Lab investor presentation published this week called its pending Neutron rocket a “direct alternative to SpaceX’s Falcon 9”. It’s not quite an even fight in terms of sheer grunt, given the 70m Falcon 9‘s weight advantage. Musk’s rocket can heft some 28 tonnes into space, while its fatter sibling, the Falcon Heavy (a Falcon 9 fattened with extra boosters) can lift 64 tonnes.

But both the Neutron and the Falcon can pull the same trick: launching a whole constellation of satellites at once.

Rocket Lab’s investor presentation says such constellation businesses will account for 83 per cent of all satellite launches by 2028.

The presentation implies

there will be enough business for Rocket Lab and Space X.

Citing “Wall Street research”, it sees the total addressable space market growing from US$350b today (US$10b from satellite launches; US$20b from “space systems” such as Rocket Lab’s Photon — or its “satellite bus” that will ferry a Nasa satellite to lunar orbit later this year; and US$320b from the slightly more nebulous “space applications” which runs from Earth-imaging and broadband from space to “significant untapped potential for value-added services including data management & analytics to support endcustomer insights”).

By 2030, it sees the total market quadrupling to US$1.4 trillion.

Against the background of that sort of industry growth, Rocket Lab projects it will become ebitda and cashflowpositive in 2024.

Potential investors were told that after a break-even 2023, operating earnings would climb steadily each year to hit US$505m by 2027.

Revenue, projected to be US$69m ($90m) this year, is forecast to steadily rise to US$1.57b by 2027.

But despite the rapidly expanding market, going head to head with the larger Space X (which recently raised US$850m at a US$74b private equity valuation) won’t be easy.

Elon Musk’s company has flown more than seven times as many missions; its founder and CEO is not beholden to any listed shareholders; and he’s quick on the draw on social media — something that’s at once frivolous and marketmoving.

On Tuesday, Musk took a light-hearted jab at Neutron (“Looks familiar”) before going on to congratulate Rocket Lab

We’ve always been the first mover and . . . continue to be the first mover into this new medium class, which we think ultimately is where the market is going to go.

Peter Beck, Rocket Lab CEO