Rocket Lab(NASDAQ: RKLB) stock tumbled ahead of earnings last week, but it’s been making up ground since — and rightly so. Rumors of rocket launch delays and wobbly stock price notwithstanding, investors should probably be pretty happy right now, after the flurry of press releases this company announced surrounding its earnings.
In addition to reporting “record-setting” revenue in 2024, and a record 16 successful rocket launches for the year, the space company informed investors of a multilaunch deal secured with Japan’s iQPS satellite service, a new satellite design — called a “Flatellite” — for a satellite constellation it hopes to build, and the purchase of a barge that Rocket Lab plans to convert into a floating landing pad to receive landing first stages of its new Neutron reusable rocket.
Image source: Rocket Lab.
Hotly anticipated ever since it was first announced four years ago, Neutron played a starring role in last week’s earnings report. In a post-earnings conference call with analysts, Neutron’s name came up no fewer than 63 separate times, and CEO Sir Peter Beck promised 2025 will be “the year of Neutron.”
So what did Rocket Lab tell us about Neutron last week, aside from what we already knew about the company’s new megarocket?
Beck predicts that satellite companies around the world will launch “10,000 constellation spacecraft” over the next 10 years. Obviously, Electron alone can’t handle that load. Rocket Lab plans to use its small launch rocket only about 20 times this year, which itself is still a 25% increase over 2024.
But at that rate, it could take Electron alone 500 years to put 10,000 satellites in orbit.
With Neutron, Rocket Lab aims to decisively expand its market share in space launch. Beck characterizes the current situation as SpaceX with a “monopoly” over “medium launch” missions with its Falcon 9 rocket. With both Blue Origin and United Launch Alliance now flying rockets again, that may sound like an exaggeration.
Technically, Falcon is a heavy-lift rocket, but as we recently learned, most SpaceX missions actually take off with less than 3.4 tons of payload, meaning a medium-lift rocket like Neutron can do the job just as well.
Accordingly, Neutron was built to handle everything from commercial deployments of satellite constellations, to “national security and defense missions as well as interplanetary exploration for the science community,” says Beck. Testing and assembly of engines and other major body parts are ongoing, and the Hungry Hippo fairing is performing as designed and will soon be mated to the new rocket’s first stage.
Long story short, despite reports to the contrary, Neutron is still on track for a first flight “in the second half of this year.” Indeed, various company officers confirmed multiple times during the conference call that the rocket will in fact launch this year, with Beck assuring investors that if the rocket doesn’t launch by July as others had forecast, it will launch no more than a few months after that, and any delay will be “not very material.”
Basically, management left itself no wiggle room at all for delaying launch into 2026 or 2027 — and doesn’t seem to think it needs any.
Image source: Rocket Lab.
Well and good. Neutron will launch on time. But it still needs a place to launch from. In that regard, Beck discussed progress building the “165-ton steel circular launch mount structure” on Wallops Island, Virginia, from which Neutron will launch.
“All major hardware and infrastructure items have arrived and been installed,” says Beck, “and our civil works on the site are practically finished.” As a result, Rocket Lab says it should be ready to hold a “grand opening in a few short months” — and just in time for a second-half Neutron first launch.
Neutron is designed for reusability, launching, landing, and getting refurbished for relaunch. So Neutron will need a place to land. For missions where the rocket carries a light payload and extra fuel, it will return to land back at its launchpad. When fuel-constrained, though, Neutron will land on a barge at sea, just like SpaceX’s Falcons do.
To facilitate this, Rocket Lab has purchased a 400-foot barge that it will transform into an oceangoing landing pad. Tongue in cheek, it’s named the new vessel “Return on Investment,” or ROI.
Beck confirmed that only the first Neutron flight will splash down at sea. Subsequent reusable launches will all attempt to land, with at least one landing at-sea on ROI planned for 2026.
CFO Adam Spice confided that “as we continue to invest in Neutron research, testing and scaling production, we expect increased capital expenditures to continue for the next few quarters.”
Q1 2025 in particular will almost certainly be a free cash flow-negative quarter, with Spice forecasting anywhere from $40 million to $80 million in cash burn, although cash burn will “moderate in coming quarters.”
This jibes with Wall Street forecasts reflected on S&P Global Market Intelligence, where analysts are predicting cash burn will hit an all-time high of $60 million in Q1 before falling off sharply. For all of 2025, Wall Street expects to see Rocket Lab burn $142 million. But once Neutron arrives and begins flying, the expectation is that by 2026, Rocket Lab will turn FCF-positive and generate $84 million in positive cash profit. And by 2027, that number could more than triple to $280 million, with positive GAAP profit arriving in 2027 as well.
On an $8.6 billion market capitalization, that works out to a forward price-to-free cash flow ratio of just over 30. If Rocket Lab is able to maintain strong double digit growth rates once Neutron begins flying, this stock really might be cheap enough to buy.
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