The Rundown - Deep Dive: What Rocket Lab Actually Does (And Why It's the Hottest Space Stock)

Episode Date: January 24, 2026

Rocket Lab is often labeled the “other SpaceX” — but that misses what actually makes the company interesting. In this weekend deep dive, we break down what Rocket Lab really does, from its Electron rocket to its fast-growing satellite manufacturing business. We dig into CEO Peter Beck’s origin story, the company’s vertically integrated model, and why its upcoming Neutron rocket could be a game-changer. Plus, the bull and bear case on Rocket Lab’s stock as space spending, defense contracts, and competition with SpaceX heat up.

Welcome back to the rundown for another weekend deep dive. Today, we are talking about Rocket Lab. Rocket Lab is the second largest space launch company in the world behind SpaceX, and 2026 is gearing up to be a very important year for the company. So in today's episode, we'll dig into their business model why they still aren't profitable and the full and bare case for the company moving forward. We got a great show for you today. Let's dive in.

Now, before we dive into the numbers and business models, let's talk about the origins of Rocket Lab. The company was founded in Auckland, New Jersey, by Peter Beck. Now, what's interesting is that Peter never went to college, but instead became a self-taught engineer. Now, Peter was one of those kids that was always building stuff. He built rockets in his garage. He even took apart the family car and then put it back together with a turbocharger on it. Fast forward to 2006 Peter founded Rocket Lab. Now, his goal was to make smaller dedicated rockets for both scientific and commercial use,

and he was able to pull it off. Just three years later, in 2009, Rocket Labs, Atea One suborbital rocket reached space. After that success, the company moved to California in 2013. They raised a bunch of money from VC investors and got to work on an even bigger rocket. Their next big breakthrough came in 2018. The company successfully launched their first orbital mission with the electron rocket. And it was this breakthrough that would allow, the company to launch payloads such as satellites for customers into space.

Since the first launch in 2018, Rocket Lab has completed 80 missions with their Electron Rocket. In 2025 alone, they launched a record 21 times with a 100% success. That was up from the 16 launches in 2024. Now, what makes the Electron Rocket unique is its size. The Electron Rocket is tiny compared to SpaceX's Falcon 9. It stands about 59 feet tall, roughly the height of a six-story building, and can carry only 300 kilograms to low Earth orbit. That's nothing compared to the Falcon 9's 22,000 kilogram payload.

And that's exactly the point. Rocket Lab designed electron for smaller satellites. But there's still been a ton of demand for the electron rockets, and it's come from all over the world. They're launching for customers across the U.S., Europe, Japan, and Korea. But here's what most people don't realize. It's that Rocket Lab isn't just a launch company anymore. They're a fully vertically integrated space company.

So let's talk about their business small. little. Rocket Lab has two main business lines, their launch services and their space systems. Let's first talk about their launch services. This is the flashy part of their business. It launches things like satellites into space for their customers. Now, you would think that this would be their main revenue driver, but it's not. According to Rocket Lab's 2025 Q3 earnings report, launch services did $40.9 million in revenue, which was less than 30% of their total revenue. The company makes a majority of their revenue from space systems. This division designs and manufactures satellites and everything associated with satellites.

So I'm talking about all the satellite components, the ground stations, the solar panels, and all the tech needed to operate the satellites in space. You're thinking of it like this. SpaceX makes money from launching rockets. Rocket Lab makes money from launching rockets and building the satellites that go on those rockets. It's a vertically integrated business model. But the company is still pushing hard to expand their launch business too. Up until this point, Rocket Lab has mostly been using their small electron rocket for launches,

but they're also actively working on a bigger rocket called Neutron. Neutron is twice the height of electron, and it's designed to carry 13,000 kilograms to low Earth orbit. So that's 43 times more payload capacity than the electron rocket. And once the neutron rocket goes into service, that's going to open up a much bigger market for Rocket Lab, and it's one of the many reasons why investors are excited about the company's future. So now let's talk about the bull case for the company. The bullcase for Rocket Lab comes down to a few things. Increased launch cadences, vertical integration, M&A opportunities, favorable U.S. policy,

and the SpaceX IPL. Let's start with the launches first. As I mentioned earlier, Rocket Lab had a record 21 launches in 2025 with zero failures. So they've built credibility in this space, no pun intended. And they're off to a strong start this year. The company had a successful launch on January 22nd where they deployed satellites for a new customer, based in Europe. And then you have the bigger neutron rocket that is around the corner, with some thinking the company will have its first launch in late 2026. If Neutron succeeds,

that unlocks a whole new market for Rocket Lab. See, right now, SpaceX's Falcon 9 basically has a monopoly on medium lift launches. But if Neutron can capture even 10 to 15% of that market, it increases Rocket Labs revenue potential substantially. This is expected to be a huge opportunity. According to Goldman Sachs, the number of satellites in low Earth orbit could grow from around 10,000 today to 70,000 by 2030. So all these thousands of satellites need to be launched into space, and Rocket Lab could play a huge role in that. Now, beyond the launches, as I mentioned earlier, the company's main business is their satellite manufacturing. So the business model is vertically integrated, which leads to higher profit margins. Right now, their space system segment has margins ranging from 35 to 40 percent, and those margins could continue to increase as Rocket Lab continues.

used to vertically integrate the supply chain. In fact, the company is already doing that through acquisitions. They recently acquired Minartic, which is a German company that makes laser communication terminals so multiple satellites can communicate with each other. And that's only the beginning. Rocket Lab's CEO Peter Beck says that they plan to buy even more companies. In fact, they recently raised a billion dollars in cash to pursue more deals. Now, the other big tail win for Rocket Lab is National Security. President Trump signed an executive order back in August of 2025, pushing for deregulation and more rocket launches. Trump is also calling for more defense spending. Now, Rocket Lab is starting to dip their toes into government contracts. They

recently landed $1.3 billion in contract from the Space Development Agency. These contracts are for building missile tracking satellites that can detect hypersonic threats. The good thing is, these are multi-year deals that provide stable income, and they also build trust with the Department of Defense. As Rocket Lab develops a relationship with the Defense Department, they could win even more defense contracts over some of the old school defense companies like Lockheed Martin. And finally, I have to mention that the hype around the SpaceX IPO could ultimately be a boost for Rocket Lab as well. If SpaceX goes public in late 2026 at a rumored $1.5 trillion valuation, it would validate the entire space sector and could drive more capital into companies

like Rocket Lab as investors search for the next SpaceX. Wall Street seems to be catching on. In fact, just this month, Morgan Stanley upgraded Rocket Lab stock with a price, target of $105, citing increased launch frequencies and favorable government policy. So that right there is the bull case. But there are some serious challenges and risks facing the company moving forward. So let's talk about the bear case. The bear case for Rocket Lab starts with competition. The space industry has gotten very competitive these days with SpaceX at the top, but there's also Jeff Bezos's Blue Origins. And the thing is, these companies aren't standing still. They're launching constantly, they're driving down costs and expanding their capabilities.

And the head start from a company like SpaceX could be too much to overcome. For example, SpaceX has launched the Falcon 9 rocket over 600 times with a 99% success rate, while Rocket Lab is still developing their comparable neutron rocket. In fact, Rocket Lab recently announced a setback in development. On January 21st, Rocket Lab said that one of Neutron's stage one tank's rupture during a hydrostatic pressure test. The company says there was no major damage and the next tank is already in production. But this is exactly the kind of state. setback that can lead to months of delays. Simply put, building rockets is hard. And that brings me to the

next reason to be bearish. Rocket Lab continues to burn money. In fact, they're still not profitable. The company is burning cash developing their neutron rocket. They originally budgeted $250 to $300 million for the program. That number is now up to $360 million and climbing. And with every delay like they just had, that'll just add to the cost. Then you add in the fact that Rocket Lab's valuation is already frothy. At the time of this recording, Rocket Lab is trading at a $40,000. $27 billion valuation, thanks to a 180% jump in their stock price over the last 12 months. So that means the company is trading at 80 time price to sales when looking back at the last 12 months in revenue. Now, comparing this to SpaceX is a little difficult because SpaceX is a

private company, so the data isn't publicly available. But based on some reports of revenues and valuation, SpaceX is trading at approximately 50 times their revenue. So Rocket Lab is more expensive when compared to SpaceX, at least when you compare it to the price to sales ratio. So essentially, Rocket Lab is priced for near perfect execution. They need the neutron rocket to pay off. They need to continue vertically integrating. And if there's any stumble like more delays or a failed launch or weaker than expected demand, that could trigger a serious correction in the stock price.

So what's my take here? You know, I'll be honest with you. It's hard not to get excited about space and companies that are working in that industry. You know, I think that Rocket Lab is one of the few space companies that could be a legit competitor to SpaceX in the long term. They have a lot of momentum right now with their electron rocket and they can to vertically integrate their business with their satellite manufacturing, and they have a huge tailwind from more defense spending in the U.S.

But if you're buying the stock today, you're assuming the company will execute on everything without any setbacks, especially their neutron rocket development. It's a high-risk, high-reward investment, but if Rocket Lab pulls us off, the upside is massive. Well, all right, guys, hope you enjoyed that weekend deep dive. Let me know the comments on Spotify and YouTube, what do you think about Rocket Lab?

Do you think the stock is going to the moon? or falling back down to Earth. Are they really going to be a legit competitor to SpaceX? Or will SpaceX just dominate everything? We'd love to hear your thoughts in the comments. And while you're at it, consider giving us a five-star rating on Apple, Spotify, or wherever you listen to your podcast. You know, all that engagement really does help us out, and it helps other people find the show.

Thank you guys again for listening, watching, and commenting. Shout out to Mike and Connor for all the work behind the scenes. And we'll see you guys back here tomorrow. Rose in lasagna, medium power, 15 minutes. Sounds like Ojo time. Let's play. Feel the fun with Play Ojo. The online casino with all the latest slot and live casino games.

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