Comment by everfrustrated
4 hours ago
Yes tho I'd argue that Rocket Lab has the finances to easily weather a few more years of Neutron set back if that ends up happening (fingers crossed it doesn't happen). They aren't going bust anytime soon. So I don't see the downside as being zero.
> Yes tho I'd argue that Rocket Lab has the finances to easily weather a few more years of Neutron set back...
The company won't go bankrupt if Neutron is delayed but I disagree with the "easily" part and Iridium complicates the picture. It throws off a lot of cash but comes with a $3.6 billion bridge loan that RKLB will need to deal with in the next year. If they term it out with debt, the leverage goes way up. If they term it out with equity, there's real dilution risk, especially in the scenario where the market prices in Neutron delays (because the stock almost certainly will be lower).
The reality is that Neutron is critical to the RKLB story, and that story is what supports the current valuation. Even after the recent decline from the ~$150 peak, this is a very richly valued company priced for close-to-perfection.
The biggest risk is that carbon composite approach proves not to be viable for a launch vehicle of this size and RKLB has to fundamentally change the design. While I wouldn't have invested in this company if I thought that risk was >50%, it's definitely not as close to 0% as most retail investors seem to believe.