RKLB Demand Strong After Earnings, Room to Grow in SPCX Shadow

**SPEAKER_1** (0:00)
And we're digging into Rocket Lab's earnings. And joining me right now for this conversation, Colin Symons, CIO, Lloyd Financial Group, and Jim Cantrell, CEO and co-founder of Phantom Space. And I'm so glad you're both here. As we take a look at Rocket Lab, the stock right now is down about 1.5% and did actually post a wider than expected loss in the second quarter. But the company talks about demand, growth opportunities, pricing power. So I'll start with you, Colin, some of your thoughts.

**Colin Symons** (0:30)
Yeah, I mean, to me, there was a lot to like in the quarter. They have an enormous backlog. I'd say the future looks pretty bright. As to why the stock is down at all, they also have a lot of expenses to deal with right now. They had a lot of acquisitions and they have to pay with it, and that's crushing margins in the short term.
So that's a near term worry.

**SPEAKER_1** (0:53)
What would you say, just to follow up, the bright future, what's the brightest part? What are you most excited about, Colin, when you see Rocket Lab?

**Colin Symons** (1:01)
Well, they're really working to become a tier one space company.
They should be in the same lane as something like SpaceX. They are an all-service company. If you want to use their satellites, you can use their satellites. If you want to use their rockets, you can use their rockets. They've had a bunch of acquisitions that have enabled them to do a lot of things. They can basically do anything in space, and they have a supply chain that is potentially second to none. So they are becoming full-featured. That's just cost a lot of money. So you have some short-term margin pressures. Their margin is going to dip quarter over quarter, but the growth potential seems phenomenal.

**SPEAKER_1** (1:49)
And Jim, you're in the same camp. I mean, you think that there are really some positives here for Rocket Lab, though you did note that some of their launch vehicles are too small. But let's get to the big picture. First up, you see demand and growth in space industry overall. Tell me a little bit about your thoughts here, Jim.

**Jim Cantrell** (2:08)
Yeah, the space industry is really a frontier economy at this point. You've got a really very large growth curve ahead. It's a long-term kind of play as far as a stock price goes, and it requires a lot of capital. So it requires patient capital and it requires a lot of that over time. Rocket Lab is a long ways down that path, and they're vertically integrated with satellites and launch vehicles, and now they've required things like iridium.
So they've got a very positive outlook in the long run, but there's going to be a lot of pain and suffering along the way.

**SPEAKER_1** (2:50)
Well, we're showing some of the competitors or peers in the group. When you talk about long term, Jim, how long are we talking about when you think this will be a winner or really will succeed in the long term? What timeline are you looking at?

**Jim Cantrell** (3:07)
Well, I think it already is a winner. There's room for a lot more winners in this market outside of SpaceX. SpaceX, some people think it's going to become a monopoly and they're not.
They are a category creator of their own and are more and more servicing their own internal capabilities and taking their launch off the table, which brings companies like Rocket Lab and Phantom Space, which I run, into the floor. And so I think, you know, if you look 10 years down the road, you're going to see as much as a 10x uptick in valuation on companies like Rocket Lab, just simply because there's such a competitive moat to get to where they're at. Any of us that are in this business, you know, it's a 10-year competitive moat, and then you just keep building on that.

**SPEAKER_1** (3:57)
Yeah, and Colin, you were talking about the satellites, the rockets, and the demand is there. And I was seeing that the company said it has more upside when it comes to rocket prices. Pricing power is imperative, is it not?

**Colin Symons** (4:14)
Well, it certainly helps, and they've been pretty firm on saying, we're not going to give early discounts because they think that they are giving a very good value right now. So the pricing power seems very strong, and it does seem like that's unlikely to change soon. Of course, you never know the future perfectly, but right now, space is very much a frontier, and there seems to be a tremendous amount of growth potential there.