While space startup Rocket Lab USA Inc. prepares to test-launch its new medium-sized rocket next year, its shares have already blasted into orbit. This mostly reusable rocket, called Neutron, is designed to give space customers an alternative to SpaceX’s prolific Falcon 9.
Rocket Lab’s quick progress and investor enthusiasm show that SpaceX isn’t an outlier. The rapid development of reusable rockets that drive down launch prices are now par for the course. This new way of designing and manufacturing applies to space components as well, including satellites. This spells trouble for the legacy space companies, such as Boeing Co. and Lockheed Martin Corp., which are geared toward long development cycles that count on expensive government contracts.
Boeing’s stumbles and cost overruns on Starliner, the space capsule that left two astronauts behind on the International Space Station, underscore outdated design and production methods. Boeing and Lockheed will have to rethink how they operate their space businesses, or they will be outmaneuvered and priced out of the market.
That may require taking previously unthinkable steps: spinning out the space units as standalone companies.
Investors are eager to snap up shares of pure-play space companies with a proven track record, said Andres Sheppard, an analyst with Cantor Fitzgerald. So far in November, Rocket Lab’s shares have more than doubled and have jumped more than fivefold in the last 12 months. Shareholders are excited that this fast-moving company will tap into robust demand to send low-orbit satellites and military hardware into space. The company also makes components that are used by other space companies, a business that now makes up most of its revenue. The goal is to be an “end-to-end space company” that plays in a $320 billion total addressable market, said Peter Beck, the flamboyant New Zealand entrepreneur who’s the driving force behind the company’s torrid pace.
Rocket Lab has earned credibility when it says it wants to launch the Neutron rocket three times in 2026 with paying customers following the first test launch. It’s planning five launches in 2027 and then seven the following year. That’s because the company has been carrying payloads to space regularly with its small Electron rocket, which now has 54 total launches and is blasting off with a tempo that trails only China and SpaceX.
Beck, who skipped getting a university degree, likes to point out that Electron reached 50 launches faster than any rocket. One example of why development cycles have shrunk is the Archimedes engines that will power Neutron. The company skipped the prototype phase and is testing the version being made now on the production line.
Along with the increased commercial demand for launching satellites into space, investors expect the Trump administration to put more emphasis on space travel, especially with SpaceX founder Elon Musk having the ear of the incoming president, Sheppard of Cantor Fitzgerald said.
Since the election, shares of Rocket Lab soared 97%. Intuitive Machines Inc., which gained fame for being the first private company to land a vehicle on the moon, surged 95%, and Redwire Corp., a maker of space components, jumped 65%.
“Trump is seen as someone who is favorable for the space industry,” he said in an interview. “There is certainly something about this Trump and Musk premium that’s beneficial to the industry.”
Of course, the share prices in the short term may have pushed above a proper valuation. But the long-term prospects are exciting. Rocket Lab said on its Nov. 12 earnings conference call that it had already lined up a customer for its Neutron launches in 2026 and beyond. SpaceX has demonstrated that the demand is there. The Falcon 9, which can carry a payload of 22,800 kilograms (50,625 pounds) to low earth orbit, has made almost 400 launches. Neutron is a smaller rocket, with a payload of 13,000 kilos in low earth orbit.
The demand for Rocket Lab’s small Electron rocket is robust, Beck said. As a sign of this, the company is booking launches at higher average selling prices, which were $7.5 million this year but now $8.2 million for the total backlog. The company will likely end this year with more than 15 launches and is expected to conduct more next year.
This type of proven execution has perked up investor interest in Rocket Lab. The company also is well capitalized and owns outright its three launch sites, giving it more control over schedules, Sheppard said. The company has made smart acquisitions, including purchasing a production facility for about 16 cents on the dollar from bankrupt Virgin Orbit, he said.
Although SpaceX is way ahead of everyone in the space race, Rocket Lab will become a competitor in that medium-size reusable rocket market, Sheppard said. The company has won government contracts, and NASA has asked it to provide a study on how it would retrieve samples from Mars.
“Where it gets exciting with Rocket Lab is the development of the Neutron rocket,” he said. “They have proven they can successfully launch, and they’ve proven that they can accomplish reusability.”
Boeing and Lockheed need to pay attention. This second space race will be won by those companies that are bold in their vision and move fast. The legacy companies are in danger of being lost in space.
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