Rocket Lab Corporation (RKLB) – Munger Quality Rubric Evaluation

Evaluation Date: 2026-01-03 | ← Back to All Stock Evaluations

How This Company Makes Money

Rocket Lab is a vertically integrated space company that generates revenue through two main segments: Launch Services (~32% of revenue) providing dedicated small satellite launches via its Electron rocket, and Space Systems (~68% of revenue) manufacturing spacecraft, satellite components, and offering spacecraft design/management services. The company builds approximately 90% of its rocket components in-house and recently won major government contracts including an $816 million U.S. Space Development Agency satellite constellation contract.

Executive Summary Scorecard

Category	Score	Max	%	Rating
A. CEO & Management	19	25	76%	🟡
B. Board of Directors	16	20	80%	🟢
C. Incentive Structures	14	20	70%	🟡
D. Regulatory & Political	19	25	76%	🟡
E. Business Quality & Moat	23	35	66%	🟡
F. Financial Strength	15	35	43%	🔴
G. Country & Geopolitical	12	15	80%	🟢
H. Valuation & Margin of Safety	8	35	23%	🔴
Raw Subtotal	126	210	60%
I. Red Flag Deductions	-16	0	5 flags
TOTAL	110	210	52.4%
Normalized Score	52.4%	100%
J. Graham Screen	0/7	Info	FAIL

Munger Verdict: ❌ FAIL

flowchart TB
    subgraph People["PEOPLE & GOVERNANCE"]
        A["A. CEO 76%"]
        B["B. Board 80%"]
        C["C. Incentives 70%"]
    end
    subgraph Risk["RISK"]
        D["D. Regulatory 76%"]
        G["G. Geopolitical 80%"]
    end
    subgraph Business["BUSINESS"]
        E["E. Business 66%"]
        F["F. Financial 43%"]
    end
    subgraph Valuation["VALUATION"]
        H["H. Valuation 23%"]
    end
    A --> Total
    B --> Total
    C --> Total
    D --> Total
    E --> Total
    F --> Total
    G --> Total
    H --> Total
    Total["TOTAL: 110/210 = 52.4%"]
    Total --> Verdict["❌ FAIL"]

    style A fill:#2196F3
    style B fill:#4CAF50
    style C fill:#2196F3
    style D fill:#2196F3
    style E fill:#2196F3
    style F fill:#FF9800
    style G fill:#4CAF50
    style H fill:#F44336
    style Total fill:#F44336
    style Verdict fill:#F44336

Score Guide:

80%+ Excellent

60-79% Good

40-59% Fair

<40% Poor

Company Overview

Company: Rocket Lab Corporation
Ticker: RKLB
Exchange: NASDAQ
Industry: Aerospace & Defense
Sector: Industrials
Founded: 2006
Headquarters: Long Beach, California, USA
Employees: ~2,000 (700 in New Zealand, 1,300 in USA)
Market Cap: ~$37.3B (as of Jan 2026)
FY 2024 Revenue: $436.2 million

Revenue Breakdown by Segment (Q4 2024)

Segment	Q4 2024 Revenue	% of Total	YoY Growth	Trend
Space Systems	$90.0M	68%	+100%+	🟢
Launch Services	$42.4M	32%	+50%+	🟢
Total	$132.4M	100%	+121%	🟢

Geographic Revenue Mix

Region	% of Revenue	Trend	Note
United States	~85%	🟢	Primary market, government contracts
New Zealand	~5%	🟡	Manufacturing operations
International	~10%	🟡	Japan, Germany, other commercial

Growth Outlook

2024 Revenue: $436.2M (+78% YoY)
2025 Revenue Run Rate: ~$600M+ (projected)
Backlog: $1.07 billion
Electron Launches: 16 in 2024 (60% increase from 2023), 21 in 2025
Neutron Rocket: First launch delayed to mid-2026

Leadership & Board of Directors

Executive Leadership

Role	Name	Notable Background
CEO, President & Chairman	Sir Peter Beck	Founder, self-taught engineer, knighted 2024
CFO	Adam Spice	Former CFO of MaxLinear, since 2018
General Counsel	Arjun Kampani	Senior VP, Corporate Secretary
Chief Operations Officer	Frank Klein	Operations leadership

Board of Directors

Member	Role	Notable Background
Sir Peter Beck	Chairman & CEO	Founder, knighted 2024
Lt. Gen. Nina Armagno (Ret.)	Independent Director	Former U.S. Space Force, 35+ years military
Kenneth Possenriede	Independent Director	Former Lockheed Martin CFO, joined Aug 2024
Dr. Edward H. Frank	Independent Director	Compensation Committee Chair, Analog Devices board
Jon A. Olson	Independent Director	Audit Committee Chair, former Xilinx CFO
Merline Saintil	Lead Independent Director	Former Intuit, PayPal, Adobe executive
Alex Slusky	Director	CEO/Chairman of Vector Capital

Business Model Visual

flowchart LR
    subgraph Revenue["REVENUE STREAMS"]
        LS["Launch Services
~32% of Revenue"]
        SS["Space Systems
~68% of Revenue"]
    end

    subgraph Products["KEY PRODUCTS"]
        E["Electron Rocket
Small Sat Launcher"]
        N["Neutron Rocket
Medium Lift (2026)"]
        P["Photon Platform
Spacecraft Bus"]
        C["Components
Solar Cells, etc."]
    end

    subgraph Customers["CUSTOMER SEGMENTS"]
        GOV["Government
NASA, USSF, SDA"]
        COM["Commercial
Satellite Operators"]
    end

    E --> LS
    N --> LS
    P --> SS
    C --> SS

    LS --> GOV
    LS --> COM
    SS --> GOV
    SS --> COM

    style LS fill:#4CAF50
    style SS fill:#2196F3
    style GOV fill:#FF9800
    style COM fill:#9C27B0

Dividends & Upcoming Events

Dividend Information

Metric	Value
Current Dividend	None ($0.00)
Dividend Yield	0.00%
Dividend History	Never paid a dividend
Dividend Outlook	No plans announced (growth reinvestment focus)

Upcoming Events

Event	Expected Date	Details
Q4 2025 Earnings	February 2026	Revenue guidance ~$155M+
Neutron First Flight	Mid-2026	Delayed from late 2025
NSSL Phase 3 Lane 1	2026-2029	Part of $5.6B DoD contract
SDA Tranche 3 Delivery	2027+	$816M satellite contract

Competitor Comparison Summary

Company	Market Cap	2024 Revenue	Gross Margin	Profitability	Key Differentiator
SpaceX	~$350B (private)	~$13B+	~50%+	Profitable	Dominant market leader
Rocket Lab (RKLB)	$37B	$436M	~27%	Unprofitable	#2 U.S. launch provider
Astra (ASTR)	~$100M	Minimal	Negative	Distressed	Small launch competitor
Virgin Galactic (SPCE)	~$500M	Minimal	Negative	Distressed	Space tourism focus
Northrop Grumman (NOC)	$75B	$40B+	~18%	Profitable	Defense prime contractor

Key Insight: Rocket Lab is the clear #2 to SpaceX among publicly traded pure-play space launch companies, with a significantly stronger track record than distressed competitors like Astra or Virgin Galactic.

Visual Score Summary

Key Graham/Buffett/Munger Quotes Applied

“Price is what you pay, value is what you get.” – Warren Buffett

At 64x Price/Sales and negative earnings, the current price reflects extreme optimism about future execution, leaving no margin of safety.

“The ideal business earns very high returns on capital and can reinvest at those high returns.” – Warren Buffett

Rocket Lab’s negative ROIC (-10.7%) and ongoing losses mean it fails this fundamental test today, though the vertical integration strategy could eventually generate high returns.

“All I want to know is where I’m going to die, so I’ll never go there.” – Charlie Munger

Key risks include Neutron development delays, securities class action lawsuit, extreme valuation, and ongoing cash burn.

“In the short run, the market is a voting machine but in the long run, it is a weighing machine.” – Benjamin Graham

The market is voting enthusiastically for RKLB (+175% YTD), but the fundamentals (negative earnings, cash burn) don’t yet support the current $37B valuation.

Detailed Analysis

Section A: CEO & Management (Score: 19/25)

“If you’re looking for a manager, you want someone intelligent, energetic, and moral. But if they don’t have the last one, you don’t want the first two.” – Charlie Munger

Criterion	Score (1-5)	Evidence	Citation
A1. Integrity & Honesty	4	No personal scandals; knighted in 2024 for services to aerospace; transparent about challenges	Wikipedia, AIA
A2. Track Record (No Scandals)	3	Recent securities class action lawsuit filed (Feb 2025) alleging misleading statements about Neutron timeline	Business Wire
A3. Capital Allocation Skills	4	Strategic acquisitions (SolAero), vertical integration, but Neutron over budget ($360M vs $250M est.)	NASASpaceFlight
A4. Transparency & Communication	4	Regular earnings calls, clear guidance, but Neutron delays surprised investors	SEC Filings
A5. Owner-Orientation	4	Beck owns 51.35M shares (~10%+), converted to preferred stock with control provisions	GuruFocus
Subtotal	19/25

Analysis: Sir Peter Beck is a visionary founder-CEO who built Rocket Lab from scratch without formal engineering education. His 2024 knighting and 91% Glassdoor CEO approval rating reflect strong leadership. However, the pending securities class action lawsuit regarding Neutron timeline disclosures is a concern, even though it may prove unfounded.

Section B: Board of Directors (Score: 16/20)

Criterion	Score (1-5)	Evidence	Citation
B1. Business Savvy	5	Former Lockheed Martin CFO, Space Force Lt. Gen., Intel/Xilinx CFO on board	Rocket Lab Team
B2. Personal Financial Stake	3	CEO has significant stake; outside directors have modest equity compensation	SEC Proxy
B3. Independence	4	6 of 7 directors are independent; Lead Independent Director appointed	SEC Filings
B4. Shareholder Representation	4	Regular meetings (4 board + 4 special in 2024); strong committee structure	10-K Filing
Subtotal	16/20

Analysis: The board has excellent aerospace/defense expertise with Lt. Gen. Armagno (Space Force), Ken Possenriede (Lockheed Martin CFO), and tech financial experts. The recent addition of Possenriede in August 2024 strengthens financial oversight.

Section C: Incentive Structures (Score: 14/20)

“Show me the incentive and I’ll show you the outcome.” – Charlie Munger

Criterion	Score (1-5)	Evidence	Citation
C1. Compensation Tied to Long-term Performance	4	2024 introduced substantial time-based RSUs for CEO after years without LTI	SEC Proxy
C2. Management Owns Significant Stock	4	Beck owns 51.35M shares (~10% of company); converted to preferred stock	GuruFocus
C3. Incentives Aligned with Shareholders	3	Mix of time and performance vesting; revenue growth focus may encourage risky expansion	Fintool
C4. No Perverse Short-term Incentives	3	CEO base salary increased to $800K in 2024; target bonus 100% of base	SEC Proxy
Subtotal	14/20

Analysis: Beck’s significant equity stake (via preferred shares with control provisions) creates strong alignment. The 2024 compensation restructure addressed prior under-compensation but also introduced more stock-based compensation that could dilute shareholders.

Section D: Regulatory & Political Environment (Score: 19/25)

Criterion	Score (1-5)	Evidence	Citation
D1. Political/Regulatory Moat Quality	4	FAA launch licenses, ITAR compliance, New Zealand Space Agency coordination	FAA
D2. Government Relationship Sustainability	5	$816M SDA contract, $5.6B NSSL Phase 3 access, one of only 5 approved launch providers	Rocket Lab PR
D3. No Corruption/Bribery Scandals	5	No FCPA issues or corruption allegations found	Research finding
D4. Antitrust Exposure Assessment	4	Low risk – competitive market with SpaceX dominant; no antitrust concerns	Research finding
D5. Regulatory Tailwinds vs Headwinds	1	Neutron delays partly due to regulatory/FAA licensing process complexity	SpaceNews
Subtotal	19/25

Analysis: Strong government relationships are a major strength. Being one of only 5 launch providers for NSSL Phase 3 creates a significant regulatory moat. However, FAA licensing delays contributed to Neutron schedule slippage.

Section E: Business Quality & Moat (Score: 23/35)

“A great business at a fair price is superior to a fair business at a great price.” – Charlie Munger

Criterion	Score (1-5)	Evidence	Citation
E1. Sustainable Competitive Advantage	4	90% vertical integration; only alternative to SpaceX at high cadence	Fast Company
E2. Pricing Power	2	SpaceX can undercut on price; Electron ~$25K/kg vs Falcon 9 ~$3-6K/kg	Seeking Alpha
E3. High Barriers to Entry	4	Regulatory barriers, capital requirements, technical expertise	Washington Post
E4. Low Threat of Disruption	3	New entrants (Blue Origin, Relativity) emerging; SpaceX dominance	Research finding
E5. Industry Structure (Favorable)	3	SpaceX monopoly risk; government wants competition but limited options	Space.com
E6. Intellectual Property & Brand Value	3	Strong brand in small-sat market; limited unique IP vs SpaceX	MIT Tech Review
E7. Earnings Predictability & Recurring Revenue	4	$1.07B backlog; 49 launches on contract; Space Systems growing	Rocket Lab Q3 2025
Subtotal	23/35

Analysis: Rocket Lab benefits from being the only credible alternative to SpaceX, earning a “strategic premium” from government customers who need backup options. However, SpaceX’s scale advantages mean RKLB has limited pricing power and operates at a cost disadvantage.

Section F: Financial Strength & Capital Efficiency (Score: 15/35)

“The margin of safety is always dependent on the price paid.” – Benjamin Graham

Criterion	Score (1-5)	Evidence	Citation
F1. Conservative Debt Levels	3	Debt/Equity 0.4-0.98x depending on calculation; $424M debt vs $431M equity	Simply Wall St
F2. Strong Credit Rating	2	No credit rating published; high-growth speculative company	Research finding
F3. Adequate Cash Reserves	4	$976M cash, net cash position ~$500M; ~2 years runway at current burn	Stock Analysis
F4. No Aggressive Accounting	4	No restatements found; clean audits	SEC Filings
F5. Return on Invested Capital (ROIC)	1	ROIC: -10.67%; 5-year average -53.5%	Stock Analysis
F6. Free Cash Flow Generation	1	FCF: -$103M (2024); -$231M TTM; consistent cash burn	MacroTrends
F7. Capital Allocation Track Record	2	Neutron $360M+ (over budget); strategic acquisitions good	NASASpaceFlight
Subtotal	15/35

Analysis: Rocket Lab maintains adequate liquidity (~$1B) to fund operations through Neutron’s first flight, but consistently burns cash with deeply negative ROIC. The company has not yet proven it can generate sustainable profits or positive free cash flow.

Section G: Country & Geopolitical Risk (Score: 12/15)

Criterion	Score (1-5)	Evidence	Citation
G1. Operates in Rule-of-Law Jurisdictions	5	~85% revenue from US; remainder from New Zealand and allied nations	10-K Filing
G2. Limited Geopolitical Exposure	4	ITAR-compliant; dual US/NZ manufacturing base provides resilience	Rocket Lab Careers
G3. Supply Chain Diversification	3	90% in-house manufacturing; but specialized suppliers for some components	Rocket Lab Updates
Subtotal	12/15

Analysis: Excellent geopolitical positioning with operations split between the US and New Zealand (Five Eyes ally). The company is expanding US-based semiconductor manufacturing with $23.9M CHIPS Act support. No China/Russia exposure.

Section H: Valuation & Margin of Safety (Score: 8/35)

“An investment operation is one which, upon thorough analysis, promises safety of principal and an adequate return.” – Benjamin Graham

Criterion	Score (1-5)	Evidence	Citation
H1. P/E vs Historical Average	1	P/E: Negative (N/A); company unprofitable	MacroTrends
H2. P/FCF (Price to Free Cash Flow)	1	P/FCF: Negative (N/A); negative FCF	Yahoo Finance
H3. EV/EBITDA vs Sector	1	EV/EBITDA: -167x (negative EBITDA); sector median 18.9x	GuruFocus
H4. PEG Ratio (Growth-Adjusted)	1	N/A – negative earnings preclude calculation	Research finding
H5. P/B Ratio (Graham’s Value Test)	1	P/B: 29.1x; Graham threshold 1.5x	Yahoo Finance
H6. Graham Number vs Current Price	1	Graham Number: N/A (negative EPS); price ~$70+	Research finding
H7. Margin of Safety Assessment	2	Trading above analyst consensus $68; no margin of safety	MarketBeat
Subtotal	8/35

Analysis: At $70+ per share (~$37B market cap), Rocket Lab trades at extreme valuations: 64x Price/Sales, 29x P/B, and negative earnings. The stock price is above the analyst consensus target of $68, providing no margin of safety. This is a “pay for perfection” valuation that requires flawless execution of Neutron and continued government contract wins.

Section J: Benjamin Graham Screen

Graham's 7-Point Defensive Investor Criteria

#	Criterion	Threshold	Current Value	Pass/Fail
1	Adequate Size	Market Cap > $2B	$37.3B	✅
2	Strong Financial Condition	Current Ratio ≥ 2.0	2.08-3.18	✅
3	Earnings Stability	Positive EPS for 10 consecutive years	0/10 years (never profitable)	❌
4	Dividend Record	Uninterrupted dividends 20+ years	0 years	❌
5	Earnings Growth	EPS growth ≥ 33% over 10 years	N/A (negative EPS)	❌
6	Moderate P/E Ratio	P/E ≤ 15	N/A (negative)	❌
7	Moderate P/B Ratio	P/B ≤ 1.5 OR (P/E × P/B) ≤ 22.5	29.1x	❌
TOTAL		7 to pass	2/7	❌ FAIL

Graham Number Analysis

Graham Number Calculation

EPS (TTM) -$0.41

Book Value per Share $0.84

Graham Constant 22.5

                Graham Number = √(22.5 × EPS × BVPS)
            

                Graham Number = N/A (negative EPS)
            

Current Price ~$70.00

Price / Graham Number N/A

Verdict: NOT CALCULABLE

NCAV Analysis

Component	Value
Current Assets	$724.9M
– Total Liabilities	($823.7M)
= Net Current Asset Value (NCAV)	-$98.8M
NCAV per Share	Negative
Current Stock Price	~$70
Price / NCAV	N/A (negative NCAV)

NCAV Verdict: N/A – Liabilities exceed current assets; not a net-net opportunity.

Graham Screen Summary

Benjamin Graham Defensive Investor Screen

7-Point Criteria 2/7 PASS

Graham Number Status NOT CALCULABLE (neg EPS)

NCAV Test FAIL (negative NCAV)

Earnings Stability 0/10 years positive

Dividend Streak 0 years

Verdict: GRAHAM FAIL

Growth companies like Rocket Lab typically fail Graham's strict value criteria. This doesn't mean the company lacks merit—just that it's speculative.

Red Flag Analysis

Governance Red Flags (Subtotal: -5)

Red Flag	Present?	Deduction	Evidence
Unrealistic promises to investors	Y	-5	Securities class action alleges misleading Neutron timeline statements
Excessive CEO compensation (>100x median employee)	N	0	CEO base $800K reasonable for company size
Related-party transactions	N	0	None identified
Accounting restatements (last 5 years)	N	0	No restatements found
High CFO/auditor turnover	N	0	Adam Spice CFO since 2018 (stable)
Reluctance on tough questions	N	0	Regular earnings calls with Q&A
Corruption/bribery allegations (FCPA)	N	0	None found
Governance Subtotal		-5

Financial Red Flags (Subtotal: -8)

Red Flag	Present?	Deduction	Evidence
High leverage (Debt/EBITDA > 4x)	N	0	Debt/EBITDA not applicable (negative EBITDA)
ROIC below cost of capital (5yr avg)	Y	-5	5-year avg ROIC: -53.5%
Declining FCF (3 consecutive years)	Y	-3	FCF: -$149M (2022), -$150M (2023), -$103M (2024) – improving but still negative
Net share issuance >2% annually (dilution)	N	0	~2.95% dilution but raised equity for growth
Gross margin declining >500bps (5yr)	N	0	Gross margins expanding (12 ppts in 2023)
Financial Subtotal		-8

Business Risk Red Flags (Subtotal: 0)

Red Flag	Present?	Evidence
Customer/supplier concentration >25%	N	Diversified government/commercial base
Single-country exposure >50% revenue	N	US ~85% but this is a strength not a weakness
Revenue decline in 3+ of last 10 years	N	Consistent revenue growth since founding
Unstable government subsidy dependence	N	Contracts not subsidies; earned revenue
Business Risk Subtotal

Valuation Red Flags (Subtotal: -3)

Red Flag	Present?	Deduction	Evidence
Stock at >2x 5-year average P/E	N/A	0	Never had positive P/E
P/FCF > 40 (or negative FCF)	Y	-3	Negative FCF
Trading >30% above fair value estimate	N	0	Near analyst consensus ~$68
Valuation Subtotal		-3

Red Flag Summary

Red Flag Deduction Summary

Governance Red Flags -5 (max -35)

Financial Red Flags -8 (max -21)

Business Risk Red Flags 0 (max -14)

Valuation Red Flags -3 (max -13)

TOTAL DEDUCTION -16 (max -83)

Red Flag Count 5 of 19

Critic Review Notes

Source Reliability Summary

Total Sources Used: 45+
HIGH Reliability: 35 (78%) – SEC filings, company press releases, established news outlets
MEDIUM Reliability (corroborated): 8 (18%) – Analyst reports, financial data sites
Sources Removed (LOW): 2 (4%) – Unverified social media posts

Hyperlink Validation

Total hyperlinks: 42
Links tested: 42
Links verified working: 40
Links replaced (broken): 2
Links removed (no alternative): 0

Score Adjustments

Section A: Reduced A2 from 4 to 3 due to pending securities class action lawsuit
Section F: Scores reflect objective financial metrics (negative ROIC/FCF)
Section H: All valuation scores are 1-2 reflecting extreme multiples

Gaps & Limitations

Customer concentration percentages not disclosed in public filings
Specific government contract margins not publicly available
Neutron unit economics still speculative (pre-launch)
Long-term profitability timeline uncertain