We came across a bullish thesis on Rocket Lab USA, Inc. (RKLB) on Substack by Steve Wagner. In this article, we will summarize the bulls’ thesis on RKLB. Rocket Lab USA, Inc. (RKLB)’s share was trading at $17.88 as of March 31st.
A rocket launching into the night sky, carrying a satellite payload.
Rocket Lab’s (RKLB) recent $5.6 billion contract with the U.S. Space Force marks a pivotal moment in the company’s trajectory. This indefinite-delivery/indefinite-quantity (IDIQ) contract allows RKLB to compete for national security satellite launches through 2029, placing it among an elite group of providers, including SpaceX, ULA, Blue Origin, and Stoke Space. More than just a financial opportunity, this contract elevates RKLB’s standing in the space industry and opens the door to significant future contracts. The Space Force’s selection of RKLB for Phase 3 of its National Security Space Launch (NSSL) program is a testament to its growing capabilities, with the company set to launch critical military and intelligence satellites using its upcoming Neutron rocket.
The contract framework spans five years, with a potential extension to 2034, and at least 30 missions expected to be awarded. RKLB is not guaranteed any missions outright but will compete for each launch against other providers based on cost, reliability, and schedule. This competitive structure reinforces that while RKLB has secured a seat at the table, it must now prove itself in the high-stakes national security arena. The company has already received an initial $5 million task order to refine its mission assurance processes, a crucial step in meeting the Pentagon’s stringent quality and reliability standards.
This deal represents RKLB’s evolution from a small-satellite launch specialist to a legitimate contender in medium-to-heavy payload launches. Until now, its reputation was built on the Electron rocket, which has completed over 60 successful missions in the small-satellite market. However, national security launches have traditionally been dominated by larger, more established players. The Space Force’s decision to include RKLB reflects a broader strategy to increase competition and diversify launch options beyond SpaceX and ULA, ensuring greater resilience and capacity in the U.S. launch ecosystem.
At the heart of RKLB’s ability to execute on this contract is the Neutron rocket, a reusable medium-lift vehicle designed for payloads up to 13 tons. Neutron represents a fundamental shift for the company, offering capabilities nearly 50 times greater than Electron. The rocket’s success is critical to RKLB’s future, as it will determine the company’s ability to secure long-term defense and commercial contracts. The Space Force’s commitment to RKLB is effectively a bet on Neutron’s success, with the company slated for its maiden flight in late 2025. Achieving this milestone is essential—RKLB must demonstrate reliability quickly to secure future government missions.
While RKLB’s inclusion in the NSSL program is a major validation, the road ahead is demanding. The company must navigate Neutron’s development, compete aggressively for contracts, and meet rigorous mission assurance standards. Investors should expect potential setbacks during initial Neutron launches but recognize the broader opportunity if RKLB successfully executes its strategy. With a clear path to scaling into national security missions and a growing reputation in the industry, RKLB has a unique opportunity to establish itself as a premier launch provider. However, success hinges on Neutron delivering on its promise, making the next 12–18 months a critical period for both the company and its investors.
Rocket Lab USA, Inc. (RKLB) is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 37 hedge fund portfolios held RKLB at the end of the fourth quarter which was 16 in the previous quarter. While we acknowledge the risk and potential of RKLB as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than RKLB but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article was originally published at Insider Monkey.