Chit Chat Stocks Podcast Summary

Episode: He Called Palantir and Nvidia. Here's What He Thinks About Rocket Lab Stock Today (Ticker: RKLB)
Date: August 20, 2025
Hosts: Ryan Henderson & Brett Schafer
Guest: Simon Erickson (Founder of 7Investing)

Episode Overview

This episode brings back Simon Erickson to revisit Rocket Lab (RKLB), a company he previously flagged as a major opportunity, and which has since seen its share price increase roughly 700% in the past year. The hosts and Simon dig into what has driven Rocket Lab’s massive growth, the transformative potential of its new Neutron rocket, government contracts, competitive positioning, financials, and Simon’s updated long-term projection for the company. Listeners get a deep-dive into the space launch market’s evolution—and why Rocket Lab may be at an inflection point.

Key Discussion Points & Insights

1. Rocket Lab’s Trajectory Since 2024 ([00:32]–[02:26])

• Stock Performance: Rocket Lab’s share price has exploded, rising over 700% in the past year.

  • “It has gone from $4 a share in March of 2024…to more than a 10x order of magnitude growth within the last 12 months.” (Simon, [01:17])

• Public Impact: The prior podcast’s coverage on Rocket Lab reportedly made a real-life difference for listeners, inspiring a return to the company's story.

2. Business Update & The Move Beyond ‘Electron’ ([02:26]–[05:14])

• Electron Era: Rocket Lab’s original rocket serviced small satellite launches at $5-10M each; enabled small firms to access space.
• Transition to Neutron: With Neutron—30x the payload, up to 10,000kg—the company is pivoting to full-scale launches, carrying large constellations for enterprise and government customers.
  • "The story right now is not about Electron, but it's about Neutron…which is an entire satellite constellation.” (Simon, [02:55])
  • Impending Neutron launch by late 2025 is set to redefine Rocket Lab’s financials.

3. Neutron: The Game-Changer & Its Economics ([05:14]–[09:18])

• Capacity: Neutron can launch up to 100 satellites per mission.

• Customer Types: Examining use cases for telecom, imaging, logistics, and especially government/defense customers for large satellite constellations.

• Scaling Challenge: Even with success, ramping launch cadence will be slow & careful (“not like you just get to flip the switch and all of a sudden launch 200 neutron rockets a year” — Simon, [07:17]).

• Pricing & Revenue Potential: Expected ~$55M per Neutron launch; government contracts the likely first major customers due to “urgent need for a second reliable supplier” alongside SpaceX ([09:18]).

4. DoD, Space Force, and the Golden Dome ([09:18]–[12:45])

• Massive Government Spend: U.S. “Golden Dome” missile defense may spend up to $175B in coming years – even a $1–2B share for Rocket Lab is transformative.

  • "A $2 billion contract for a company of this size right now is absolutely huge and game-changing…” (Simon, [11:07])

• Why Now: Rising geopolitical instability and the need for redundancy beyond SpaceX (due to Elon Musk’s unpredictability) are clear drivers of government urgency.

5. Backlog and Inflection Point ([12:08]–[14:07])

• Backlog Today: $1B.
• Simon’s Projection: Expects backlog to rise to $5.2B by end of 2026, and potentially $10B by 2030.
  • "We go from $1 billion [backlog] at the end of this year, if Neutron is successful, $5 billion by 2026, and then up to $10 billion by 2030.” (Simon, [13:29])

6. Acquisitions & Building the ‘End-to-End Space Company’ ([15:42]–[19:38])

• Financial Strength: Raised $770M during the SPAC boom; minimal debt; “strong foundation and flexibility.”

• Recent Acquisitions: Minaric (German satcomms, essential for inter-satellite links) and GEOST (US defense-focused, missile sensing tech); ~$400M combined.

  • “Most companies…can’t manufacture the satellites themselves. They actually call Rocket Lab…help us design it…manufacture the satellite…and all the payloads and then also launch it…” (Simon, [16:17])

• Strategic Fit: Acquisitions are bolt-ons providing missing tech and talent, not game-changing scale moves.

7. Segment Breakdown: Launch vs. Space Systems ([19:13]–[21:07])

• Current Split: 40% launch, 60% ‘Space Systems’ (manufacturing, design, contracting).
• 2040 Projection: Space Systems could be 80% of business, launch just 20%.
  • “Already two thirds of the business is Space Systems... by 2040... about 80% space systems and 20% for launch.” (Simon, [19:48])

8. Vertical Integration & Space Applications ([21:07]–[26:10])

• Client Preferences: Most want a ‘one-stop-shop’—design, build, launch, and operate.
• Emerging Opportunity: ‘Space applications’ (like AWS for satellites)—Rocket Lab could own & lease satellite constellations, offering recurring revenues at high margins.
  • “The third pillar…if the first two were launch and satellite manufacturing, the third pillar is just going to be operations…” (Simon, [23:58])

9. Competitive Landscape & Market Size ([26:19]–[28:29])

• Competition: SpaceX’s Starlink, Amazon’s Kuiper, OneWeb—massive addressable market, but Rocket Lab only needs a fraction to create huge value.
  • "Even if Rocket Lab gets 20,000 satellites placed within the next 15 years, that's a really big deal for this business.” (Simon, [27:54])

10. Key Growth Drivers ([29:51]–[33:16])

• Massive Contracts over Small Gains: Shift from “democratizing” space to targeting government/defense megadeals—e.g. the Golden Dome.

  • "It's going to be Golden Dome spending $175 billion over the next four years. You know, what is, how many billions of dollars of that can Rocket Lab get?” (Simon, [30:10])

• Unique Position: With tensions between the government and Elon Musk/SpaceX, Rocket Lab stands as the only credible alternative for certain national security missions.

  • “You have to have reliability…Even just qualifying Rocket Lab in for something you had no other option for before, that's huge.” (Simon, [32:41])

• Haste Program: Rapid-response launches for defense, especially for hypersonic missile threats.

  • “Haste is the government calls you and says, hey, you got a week. Can you get this up...?” (Simon, [33:23])

11. Financial Outlook ([34:14]–[36:55])

• Margins Expected to Expand: Scalability, economies of scale, and increasing reusability will improve gross and operating margins over time.
• Free Cash Flow: Simon projects positive, significant free cash flow by 2027–2028, potentially >$1B by 2030.
  • "I think that's probably going to happen somewhere between 2027 and 2028. But then again, you're going to see an inflection point.” (Simon, [35:19])

12. Simon’s DCF & Portfolio Management ([36:55]–[39:08])

• Historic Calls: Simon flagged RKLB at $4/sh (target $22) in March 2024; now at $44.

• Updated Price Target: His DCF now yields $27/share as a prudent new buy price (he expects long-term upside, but finds the current price less attractively mispriced).

  • "[...] the price that I would recommend buying shares at is 27 a share for Rocket Lab, and that's about... $5 per share higher than when I last looked…last summer." (Simon, [39:08])

• On Managing Winners: Not a ‘never sell’ but doesn’t rush to trim either; owns the decision based on underlying fundamentals.

13. 10-Year Outlook & Uncertainties ([41:32]–[44:36])

• Launch Cadence Uncertainty: Analyst predictions of 20 Neutron launches by 2028 considered “too aggressive;” Simon expects slower but steady ramp.

• Space Applications Upside: Potential for multi-billion-dollar, high-margin recurring business leasing satellite access (not fully reflected in current projections).

  • “I have that modeled…as $3.2 billion by the year 2040. Could be an order of magnitude larger than that if we see this catching on…” (Simon, [43:03])

• Talent Wars: If SpaceX talent leaves for Rocket Lab, the impact could be profound.

14. Moon/Mars Missions: “Cool but Not Material” ([44:36]–[45:42])

• Public Excitement vs. Revenue: NASA contracts (Moon, Mars, Venus missions) are not forecast to be material contributors, as defense budgets dwarf science budgets.
  • “In terms of revenue contributors, they're not really big…just part of me that likes following along with it. I think they're really cool.” (Simon, [45:30])

Notable Quotes & Memorable Moments

• On Neutron’s Potential:
  “It's going to be the step change that kind of unlocks the economies of scale for this entire industry.”
  — Simon ([06:03])

• On Government Spending:
  "A $2 billion contract for a company of this size right now is absolutely huge and game-changing…”
  — Simon ([11:07])

• On SpaceX & Dependence:
  "When you need a reliable launch partner [government], it’s like death by a thousand paper cuts... Even just qualifying Rocket Lab in for something you had no other option for before, that's huge."
  — Simon ([32:18])

• On Scaling Challenges:
  "Everyone just assumes this is going to happen and it's going to be a success. I mean, Elon blows up his own rockets just to demonstrate that he's learned something from it. Even getting there is a huge feat, not just for the company, but for society as a whole."
  — Simon ([06:53])

• On Portfolio Management:
  "Now the stock is selling for... $43 a share. I mean, it's a 10x in a year and a half. And now the question is... is it going to 10x again in the next year and a half? Probably not."
  — Simon ([37:34])

Timestamps for Key Segments

• [00:32] — Introduction & Rocket Lab performance since last coverage
• [02:26] — Q2 earnings review and business progress
• [05:14] — Neutron rocket: significance, customer base, and differentiation
• [09:18] — Government contracts, Golden Dome discussion
• [12:08] — Backlog status & inflection point
• [15:42] — Financial strength and acquisition strategy
• [19:13] — Business segment breakdown: Launch vs. Space Systems
• [21:07] — Vertical integration, space applications, and recurring revenue model
• [26:19] — Competitive landscape: Starlink, Amazon Kuiper, and market size
• [29:51] — Growth drivers: government contracts and macro trends
• [33:23] — Haste program and rapid-response launches
• [34:14] — Financial model and margin outlook
• [36:55] — DCF valuation & Simon’s portfolio strategy
• [41:32] — 10-year outlook: opportunities & unknowns
• [44:36] — Moon/Mars missions and impact on revenues

Closing Thoughts

The episode concludes with Simon emphasizing Rocket Lab’s inflection point: the upcoming Neutron launch, immense government spending opportunities, strong vertical integration, and the underestimated upside of space applications—all while noting that execution risk, contract wins, and eventual scaling will drive the ultimate outcome. Despite the stock’s enormous run, there remains meaningful long-term potential if projections materialize.

For more from Simon Erickson, see 7Investing.com
Full episode and show notes available in your podcast feed.