Shares in Peter Beck's Rocket Lab have taken a drubbing after a report from Bleecker Street Research suggesting the company is behind schedule in getting its upcoming Neutron craft ready for launch by the middle of this year.
Bleecker Street Research (BSR) is a blog run by Chris Drose, who is behind Bleecker Street Capital, a fund manager that's short selling biased. The fund manager said it's taking a short position on Rocket Lab shares, with the space company being valued at over US$11 billion currently.
On BSR, Drose points to multiple factors that he believes could delay the launch of Rocket Lab's Neutron, which is the medium payload space craft it pins its future earnings on.
As of writing, Rocket Lab USA shares have dropped by nearly 10 per cent.
Rocket Lab said in November last year the expected debut launch for Neutron would be in 2025. That date follows a rescheduling of the Neutron launch from 2024.
In the report, BSR opines that while Rocket Lab has captivated investors with the promise of Neutron, its research shows the promise is built on shaky ground.
BSR believes the Neutron launch won't take place until mid-2026, and could be delayed until mid-2027. Engine development, structure production, Wallops Island in Virginia, USA, launch pad construction, and transporting Neutron to the site are all factors cited by BSR as driving the delay.
Neutron is said to have a payload capacity of 13,000 kilograms to low Earth orbit, versus 22,800 kg for SpaceX Falcon 9. Rocket Lab is also aiming for the 43 metre tall Neutron to be reusable, for multiple launches.
Prior to Neutron, Rocket Lab has conducted 60 successful commercial launches with its Electron rocket that has a small, 300 kg payload.
While one version of Neutron's 3D-printed rocket engine Archimedes was hot fired in August last year, BSR noted that a new, 200 kg lighter version two of the power plant appeared in January this year, with Rocket Lab publishing pictures of it.
It is unclear if version two of Archimedes will pass the required qualification tests before launch this year.
BSR is also casting doubts on Rocket Lab being able to get its asking selling price for launches of US$50 million to US$55 million, due to Neutron being new and unproven. Instead, BSR cites unnamed space industry executives and engineers as saying Neutron may need to start off with flight discounts for commercial customers.
Even Rocket Lab's New Zealand connection counts against the space company, Bleecker Street Research says.
The report quoted an unnamed senior aerospace executive:
“There’s always that connection to New Zealand, both from their personnel and in the leadership and the ownership. You don’t have full control, and as a defense contractor that’s an issue. The CEO represents a whole cadre of foreign nationals to begin with, several hundred New Zealanders… When you’re launching a 5,000 kg satellite and it’s in the hundreds of millions, close to a billion dollars in value, they’re really going to take issue with it not being totally US-controlled and not being totally US-based employees that are working to assemble the launch vehicle and run launch service across that program.”
Peter Beck moving to the United States could mitigate the "foreigness" of Rocket Lab, but there's the looming sceptre of SpaceX's Elon Musk, who has a pivoted himself into a position of power within the Trump administration as well.
The space company said in November last year it had signed a contract with a "confidential commercial satellite constellation operator". It has also been in talks with the US government, to be part of the country's National Security Space Launch programme, which is scheduled for take-offs between this year and 2029.
Rocket Lab has been contacted for comment on the story, which will be updated when it is received.
7 Comments
Reads like a WallStreetBets article, and should have opened with a note on Bleecker Street's short position. RLKB no doubt has heads winds coming up, but the way the company is managed and approaches its work is quite positive. It'll have a slice of the pie, and even if Neutron is delayed (woah, a massive space engineering project has a delay) the mid-term to longer play trajectory still remains positive. Rocket Lab is hardly covered in these 'pages' - quite odd to see this come out in a week when the entire market has been slammed, and ahead of earnings. Edit: I note the article title on the main page notes them as a short seller. And disclosure - yes I do hold some RKLB, but mainly defensive because its a solid kiwi company do great things in an nascent market.
Agree at some point RL becomes a buy again, its just how delayed , delayed is....
Its timing the market, not time in the market here.
As stated I am bearish on all tech valuations here,
I do not believe earnings can be delivered to justify valuations.
bonds seem to agree with me all of a sudden
Apart from in the headline: "Bleecker Street Research (BSR) is a blog run by Chris Drose, who is behind Bleecker Street Capital, a fund manager that's short selling biased. The fund manager said it's taking a short position on Rocket Lab shares, with the space company being valued at over US$11 billion currently".
Fair call.
I had taken this as the headline: Shares in Peter Beck's Rocket Lab have taken a drubbing after a report from Bleecker Street Research suggesting the company is behind schedule in getting its upcoming Neutron craft ready for launch by the middle of this year.
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