Late Stage Capitalism
Physician, Long-Term Stock Investor with 30 Years of Experience
Rocket Lab's roughly $80 billion valuation, including its newly announced $3 billion dilution, would require $3-4 billion in profit to be reasonable, and there is no scenario where it earns $3 billion within three years. The market can stay illogical longer than expected, so it could still run 50% before crashing 80%; the same applies to AST SpaceMobile. x.com x.comÂ
Rocket Lab's valuation already more than bakes in space data centers. At a $74B market cap, over 74 times sales, Rocket Lab had better be building more than just data centers in space. This is a call on the price, not on the underlying quality of the business. x.com x.comÂ
Rocket Lab is probably worth about $10 billion, far below the nearly $50 billion it trades at. @FindleysFinance notes trailing revenue of $769 million and operating cash flow of negative $222 million. x.comÂ
Good SpaceX earnings could help Rocket Lab lead the new-space sector higher with a rally as violent as its capitulation. Rocket Lab is the sector leader outside SpaceX; its RSI is extremely oversold, the lower Bollinger band is overstretched and MACD's negative divergence is subsiding. Three upside gaps lie at $55.25-59.18, $64.22-65.71 and $73.11-74.76. The highest should fill before year-end, though the exact date is hard to predict. x.com x.comÂ
Rocket Lab's $3B at-the-market offering shows it needs investor cash because it has no real earnings or path to profitability, and it should have raised $10-15B while the window lasts. Selling stock at such a high valuation is the only way to sustain the next 18-24 months, and the coming SpaceX IPO will most likely be the sell event for the entire space sector. x.com x.comÂ
Rocket Lab still looks ridiculously expensive at 29 times forward sales against SpaceX at 22 times, even after a 65% fall. At 22 times, Rocket Lab would be roughly $38, and SpaceX would still be the pick. SpaceX also has better forward guidance; Rocket Lab's negative adjusted EBITDA makes sales multiples the valuation yardstick. x.com x.com x.com x.comÂ
Rocket Lab should double by June 2026 if SpaceX IPOs at around $1.5T, because as the clear number two with similar capabilities it is valued at only $38B, a gap that looks far too big. At $1.7T, SpaceX would trade at over 200x its roughly $8B in EBITDA, as reported on the All-In podcast, an insane multiple. x.com x.com x.comÂ
Repeated Neutron delays undermine the premium on Rocket Lab stock when execution keeps slipping. The company does not live or die by Neutron, but 50x sales was unjustified; even at 26x 2027 sales, a legitimate price suggests another 50% decline. x.com x.comÂ
Rocket Lab is mispriced because the whole company carries an aggressive non-prime valuation when perhaps only a minority of it merits one. In a take described as devastating for Rocket Lab, the bulk of the business deserves a prime valuation and only a minority a premium non-prime one. That reverses this year's more interesting trades, where companies at prime-ish valuations held a large non-prime component. x.comÂ
Investors rotating into cheaper stocks with more upside should ultimately benefit Rocket Lab and AST SpaceMobile. Both have already suffered major drawdowns. x.comÂ
Rocket Lab's price bets on the most optimistic version of its results a decade out while it is still losing money, so the market is pricing a story rather than the company. Narrative now earns a premium and earnings do not, as with IonQ and AI-server-labeled Dell and HPE, and one quarterly miss means exit. This can last a long time in liquid, risk-on markets, as 1999 dot-coms and 2021 SPACs showed, so a drop is not imminent; buyers now are buying how long sentiment lasts. x.comÂ
