Rocket Lab: Deep Dive On 2025

Overview

Rocket Lab (RKLB) has a ton potential in 2025 given the first scheduled launch of Neutron, the lower payload cost rocket I talked about last week that is the center of the company’s plans for growth, and is highly anticipated by investors. As the company introduces their version of reusable rocket to the market, this is expected to propel (no pun intended) Rocket Lab to strengthen their position against SpaceX. I really see it as their 'Model T’ of rockets.

Really, 2025 is about the company stitching together the different parts of their vision. They are closer than ever to their goal of becoming an end-to-end space company.

Deep Dive On 2025 Plans

Originally planned to launch this year, the Neutron’s schedule was pushed back to 2025. Rocket Lab is eyeing the rocket to be a contender for the National Security Space Launch (NSSL) Phase 3 missions as CEO Peter Beck is confident that the vehicle is on track for next year’s launch date. The $8 million contract that they secured from the U.S. Air Force Research Laboratory (AFRL) will support the company’s efforts in applying digital engineering techniques to the Archimedes rocket engine, which will use liquid oxygen and methane to power the Neutron reusable launch vehicle.

The company feels fairly confident on its bid for the U.S. Space Force's National Security Space Launch (NSSL) Phase 3 Lane 1 program, valued at $5.6 billion over five years. Through the Neutron, Rocket Lab will compete against SpaceX and other bidders for faster launches of less sensitive payloads. The program’s first launch is scheduled in December 2025.

At the same time, Rocket Lab is using their other rocket, Electron, for a VICTUS HAZE demonstration for an on-orbit space domain awareness mission, slated for fall 2025. In April, the company was awarded a $32 million contract by the U.S. Space Force’s Space Systems Command (SSC) to deploy a rendezvous and proximity operation-capable satellite. The mission will refine rapid launch tactics and operational techniques for future tactical space operations (TacRS) preparedness.

Finally, the company wishes to stitch it all together and wants to focus on bringing the whole company together to become an end-to-end space company. These include separation systems, radios, launch services, spacecraft design and manufacturing, and many more. As CEO Beck puts it:

“Two-thirds of our revenue comes from our space systems business. A lot of people see us as a rocket company. It didn't help when we named ourselves Rocket Lab. We're an end-to-end space company, providing spacecraft design and manufacturing services, along with satellite components, flight software, and other things. We're now shoulder to shoulder with the other primes.”

What This Means For Investors

The launch of the Neutron will allow Rocket Lab to carry larger civil and defense payloads since its payload to low earth orbit (LEO) is at 13,000 kilograms, far higher than the Electron’s capacity of only 300 kilograms to LEO. This is a promising start because the company has already sealed a deal with a confidential customer to fly on Neutron at least twice and may potentially increase to more launches to deploy an entire planned constellation of satellites.

Although there will only be one test launch next year, this is going to gradually increase to three times in 2026, and five times in 2027. I believe these launch estimates are going to prove realistic, so investors should expect a huge potential for the company to earn higher margins (significantly above their 26.06% gross margins currently).

On the demand side, investors should also remain confident that the company can sustain or even beat their launch records next year. As CEO Beck put it in an interview:

“Of all the things I worry about at night, demand is just not one of them.”

But to sustain this, the Neutron has to be successfully launched. CFO Adam Spice emphasized:

“I think it still looks very much like it had before when or long really where we can't get to cash flow positivity on any sustained basis until we get the first Neutron off the pad.

“I would say, the middle of next year. Again, middle of next year kind of represents kind of a minimum viable product and minimum viable infrastructure in this case. So there will be continued investment, but at a very, very different level. So I think he has -- my kind of guideposts are roughly two quarters after the first Neutron launch.”

Risks

Rocket Lab delayed the first launch of its Neutron because of “a whole bunch of stuff that just sort of adds up,” according to CEO Beck. While management indicated that these technical issues are not tied necessarily to the Archimedes engine, this is really a game of confidence. Rocket Lab’s current share price is built on immense optimism from investors that their growth is about to (again no-pun intended) take off like a rocket ship.

As of earlier this month, Rocket Lab’s total missions to date this year is only 13, compared with SpaceX’s 120 missions. This puts the company far behind Elon Musk’s firm, but still second in the US by market share. Overall, the company recently celebrated their 50 launch milestone, which they claim they reached faster than any other commercially developed rocket.

Bottom Line

Rocket Lab’s Neutron rocket, which is set to launch in 2025, is central to the company’s 2025 roadmap, and key to the vision overall for the next 3 years as Peter Beck’s upstart company looks to grow their commercial and government contracts.

While risks of further delays exist, a successful launch by Neutron will boost the company towards profitability because it will mean more consistent cashflow from their launch business. Neutron is the foundation for Rocket Lab’s long-term growth as they scale their Neutron launches in 2026 and 2027. With an improved balance sheet and strong guidance, I remain confident about the company’s performance.

Disclosure: At the time of this publication some members affiliated with Marksman Research own stock, options or other interest in RKLB.