Image courtesy of 123rf.com

After the successful completion of the Apollo program in 1972, NASA’s Space Shuttle program was the next major step with the first reusable spacecraft. In the early 1980s, Space Shuttle exerted around $54,500 per kg of payload to Low Earth Orbit (LEO). By the time the program ended in 2011, this cost was reduced to ~$14k. 

At present, SpaceX’s mid-sized Falcon 9 is the epitome of efficiency with around $2,720 per kg of payload to LEO. When fully loaded, Falcon Heavy further reduces the cost by nearly half. Such a cost-efficiency rise paves the road to a $1 trillion space industry, per Morgan Stanley Research.

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Currently, the $350 billion space sector is mostly divided between consumer TV, ground equipment and non-satellite industry. Image credit: VanEck via Haver Analytics Forecast.

In the absence of SpaceX being a publicly traded company, Intuitive Machines (Nasdaq: LUNR) and Rocket Lab USA (Nasdaq: RKLB) stand out from the space stock crowd. Year-to-date, LUNR stock is up 535% to $15.07 per share,while RKLB is up 350% to $23.89 per share (at the time of writing on November 25th). 

But moving into 2025 and beyond, which one is more likely to get the upper hand?

Intuitive Machines: Taxpayer-Funded but Top of the Selection Crop

It is safe to say that the space sector had to be jump-started by the government, i.e., taxpayers, due to inherent risks involved. From that era, we moved into the age of private-public partnerships where taxpayers fund NASA and NASA funds various initiatives.

In September, NASA picked Intuitive Machines for a 5-year, $4.82 billion Near Space Net (NSN) contract, solidifying the company’s position as the chosen one to revisit the Moon. The funding, which is incremental, could then extend to 2034, depending on IM’s achieved goals.

IM successfully completed its first Nova-C lunar landing in February. The next IM-2 mission is also scheduled for February, in 2025, originally planned for November 2024. Once again, the lander will carry various payloads for NASA’s Commercial Lunar Payload Services (CLPS) program ($116.9 million to IM).

In short, IM plays a key part in NASA’s Artemis program to establish a sustainable lunar presence with satellite constellation and ground infrastructure. Yet, as of the latest November 14th earnings call for Q3, IM is firmly in a net loss territory. 

Intuitive Machines: Profitability Far Away but Less Relevant

For the first nine months of 2024, IM suffered $181.78 million net loss vs $7.16 million net income in the same period for 2023. This brings IM’s total debt of $229.3 million roughly in line with its total value of assets at $224.8 million ending September. 

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IM’s annualized operating income from the end of 2021 to Q3 2024 (in billions). Although improving on year-ago’s net loss of $24.8 million, this quarter still delivered a negative operating loss of $13.7 million. Image credit: MacroTrends

However, IM ended Q3 with both the highest level of cash, $106.9 million, and the highest backlog of $316.2 million, owing to 359% year-over-year revenue growth. At the end of the line, the pioneering work of Intuitive Machines should not be viewed as regular business.

It is not likely that the company will enter a sustainable profitability zone anytime soon. Rather, investors should expect more delays and more contract rewards. This will drive its backlog further. In-between mission completions, which will drive the news cycle alongside investor interest, LUNR stock valuation will fluctuate accordingly.

Ultimately, the space sector is defined by human capital scarcity. IM not only emerged as the pick of the (NASA) litter, but retail investors will likely want a piece of lunar history in the making. For the time being, this is why investors should view IM’s earnings secondary to reaching lunar milestones. 

At the present price of $15.07 per share (on Nov 25th at the time of writing), LUNR stock price is aligned with the average price target of $15.7, against the bottom forecast of $12.5 and the high ceiling of $20 per share twelve months ahead. 

Rocket Lab USA: Increasingly In-Demand SpaceX Alternative

Although also tapping into government contracts, Rocket Lab is establishing itself as a go-to satellite launcher for the wider space sector. Unlike Intuitive Machines which relies on SpaceX, Rocket Lab directly competes with SpaceX with small-sized Electron rockets and upcoming reusable Neutron rockets for mid-sized category to tackle Falcon 9 dominance.

In fact, alongside SpaceX’s Falcon 9 and China’s Long March rockets, Electron ranks 3rd for the most frequent global launches to LEO. Unlike last year, Rocket Lab’s performance during 2024 has been flawless, without a single launch failure. 

This points to a well-oiled end-to-end satellite deployment platform for both governmental and commercial clients. For NASA, Rocket Lab is currently conducting a study on the feasibility of retrieving Mars samples ahead of schedule a 

For NASA’s ESCAPADE program, standing for Escape and Plasma Acceleration and Dynamics Explorers related to Mars’ atmosphere, the company already completed two spacecraft on schedule. Originally, Jeff Bezos’ Blue Origin was supposed to launch ESCAPADE spacecraft in October but NASA was not sufficiently confident.

If Rocket Lab secures another NASA program contract, this will undoubtedly reflect on RKLB stock. For 2025, the company’s leadership is confident to partake in the Space Development Agency (SDA) enrollment of 200 satellites within Tranche 3 program related to Proliferated Warfighter Space Architecture (PWSA).

In January, SDA picked Rocket Lab to design and build 18 Tranche 2 Transport Layer-Beta Data Transport Satellites (T2TL – Beta), which was the company’s first defense contract worth $500 million. 

For investors, Rocket Lab’s Neutron rocket will be the major milestone mid-2025. Even if the first launch turns into a failure, investors should use that opportunity to buy the dip, given the company’s proven track record. 

Rocket Lab USA: Financials Mirror High Space Capex

In the Q3 2024 financial statement, Rocket Lab had 55% year-over-year revenue growth to $105 million. Like IM, the company significantly expanded its backlog, by 80% to $1.05 billion total, of which $721.2 million for the Space Systems division and $326.4 million for Launch division.

Ahead of Neutron deployment, Rocket Lab’s costs still go mainly to R&D, at $42.8 million vs $25.9 million to SG&A (selling, general, and administrative). Accordingly, just like IM, Rocket Lab is still outside the profitability zone, having reported $51.9 million net loss.

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Rocket Lab’s annualized operating income since mid-2021 to Q3 2024 tells the same story as Intuitive Machines’ one. Image credit: MacroTrends

But based on heightened demand and established reputation, the company has a strong cash pool of $292.5 million vs total current liabilities worth $223.37 million. Rocket’s Lab total assets are worth around $941 million. 

RKLB’s current price (at the time of writing on Nov 25th) of $23.89 is over the median price target of $20.85 per share. The bottom outlook for RKLB stock is $12 while the high ceiling is $30 per share. 

The Bottom Line

Both Rocket Lab USA and Intuitive Machines rely on private-public partnerships. In their own fields, they have proven themselves enough to be selected for lucrative government contracts. However, while IM is more reliant on NASA’s incremental funding, Rocket Lab operates a more holistic launch solutions platform. One that is poised as a viable SpaceX alternative for commercial clients.

Although this gives Rocket Lab a larger potential revenue cushion, it is still in the shadow of NASA’s contract for IM’s lunar exploration and infrastructure. The YTD growth of RKLB and LUNR price reflects this. But long-term, it is likely that Rocket Lab will be the major space player that overshadows Intuitive Machines.

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