Rocket Lab shares blast off after record result, new military contract

Rocket Lab shares were up more than 15 per cent in late Nasdaq trading, outpacing gains in the broader indexes as US markets surged on signs inflation is easing.

The jump followed the Kiwi-American company reporting record third-quarter revenue - up 14 per cent to US$63m - after yesterday’s market close, plus chunky new contracts.

Its net loss narrowed from the year-ago quarter’s US$88m to $35m, and an adjusted operating earnings loss of US$12 to $16m was forecast for the fourth quarter.

“Buys into the stock went up by 50 per cent after Rocket Lab posted earnings, and Kiwi investors have been buying up all month, with three buys for every sell, suggesting they think the best days for the company are still to come,” said Eliot Hastie, a spokesman for share trading platform Stake.

“In an earnings season that has been a disappointment for many of the most popular stocks for Stake investors, particularly in the tech sector, they’ll be heartened to see positive news coming in other areas,” Hastie said.

“But short-term gains aside, there’s still a question mark about when Rocket Lab will turn a profit, and investors who bought in at the US$10.00 price last year would still be down almost half on their initial investment. So the proof will come in how the company can continue to execute on its pipeline and really take off in the coming years.”

More Lockheed Martin business

Rocket Lab also announced it had won two contracts, worth a total US$14m, to provide “lightband” systems to Lockheed Martin and another undisclosed company, building a network of satellites to provide “resilient, low-latency military data and connectivity worldwide to the full range of warfighter platforms” for the US National Space Agency, which sits under the Department of Defense, according to a Rocket Lab investor presentation.

Lightbands are separation systems used to attach satellites to rockets and release them in space once the rocket reaches its intended orbit.

It was Rocket Lab’s second major contract win involving Lockheed recently.

Through its New Mexico-based SolAero subsidiary (bought for US$80 million last December) Rocket Lab will supply radiation-hardened solar cells that will power three Lockheed Martin “Next GEN OPIR GEO (NGG)” satellites being built for the US Air Force’s new US Space Force wing (USFF).

The contracts follow New Zealand signing a space defence accord with the US and other allies in February.

Rocket Lab has also just opened its new operations and testing centre in Mississippi.

Founder Peter Beck says the Mississippi complex - which sits within Nasa’s Stennis Space Center - will fast-track development of the “Archimedes” engine that will power Rocket Lab’s Neutron Rocket, due to first launch in 2024.

Rocket Lab said it was “pursuing capital investment from the Mississippi Development Authority to further development of the Archimedes centre. Political support, at least, seems in place, with Mississippi’s two (Republican) representatives in the US Senate, Rocker Wicker and Cindy Hyde-Smith, both releasing statements that Rocket Lab could provide “quality jobs for years to come”.

An artist's impression of the Neutron launchpad planned for Nasa's Wallops Island, Virginia facility. The first launch is scheduled for 2024. Image / Supplied

The firm said it has also built the first part of its Neutron production plant in Virginia, and expects the Stage 1 tank structure for its new rocket to be built at the site in the first quarter of next year.

The Virginia plant is part-funded by the US state, which chipped in US$45m in grants, while the Neutron itself is bankrolled, in part, by a US$24m grant from the US Air Force’s Space Force wing.

Operations in Colorado (which came with Rocket Lab’s purchase of ASI, a maker of mission control software) and its corporate headquarters and production facility in Long Beach, California are also being expanded as the firm heads toward 2000 staff.

First launch from US soil Dec 7

Rocket Lab also said its first launch from US soil - an Electron rocket that will take off from Launch Complex 2 in Virginia - is close. A launch window will open on December 7. It will be the first of three launches, involving 15 satellites, for Hawk Eye 360, a maker of radio-frequency “geo-analytics” tracking services for military, maritime and border security clients.

Rocket Lab's expanded R&D facility in Mt Wellington includes work on propulsion systems and research and development toward its much larger, crew-capable Neutron rocket, due for its first launch in 2024. Photo / Supplied

The firm also touted further investment in its Mission Control and assembly centre in Auckland, which has been expanded to accommodate a satellite systems production plant and a team doing R&D work for the Neutron.

The quarter also saw Rocket Lab stage its first test re-firing of an Electron first-stage retrieved after an ocean splashdown.

The firm says re-using boosters will be more environmentally-friendly and save on launch costs. (Its aim of catching an Electron as it parachutes back to Earth, for minimum damage, remains elusive. Last weekend, the helicopter charged with hooking the parachute line ended up being evacuated from the drop zone after communications were lost with the falling rocket).

Rocket Lab’s rise today took its shares to US$5.43 (for a US$2.5 billion market cap) in late trading, well above its US$3.53 12-month low but still well off its US$10.00 listing price.

Allbrids stuggles for lift

Not all boats were lifted equally by today’s Wall Street surge. In late Nasdaq trading, another Kiwi-American company, Allbirds - whose shares were hammered to a post IPO low of US2.52 yesterday - was up only 0.6 per cent.

“It’s been a rollercoaster year for the Allbirds share price, and we’re in a tricky economic environment for companies in the consumer goods and retail businesses, with people around the world tightening their belt and the effects of supply chain issues continuing,” Stake’s Hastie said.

“After a long year on the market for Allbirds trading activity in the company on Stake has dropped to an all-time low, in line with its share price.

“Investing is a marathon, not a sprint, though, and we’re still seeing more buys than sells in the stock from Kiwi Stake investors, who tend to take a longer-term view of companies’ prospects. The question now is whether Allbirds can weather the storm in the short-term, and pick up the pace down the road.”