Rocket Lab has racked up losses of $290m over past eight years

Thursday, 29 July 2021

Rocket Lab has racked up big losses since it launched New Zealand into the space industry, with any profits still years away, according to a regulatory filing.

A document filed by Nasdaq-listed shell company Vector Acquisition stated that Rocket Lab USA had accumulated losses of US$203 million (NZ$290 million) since 2013.

That was after reporting losses of US$30m and US$55m, respectively, in 2019 and 2020 and a further $16m loss in the first three months of this year.

Rocket Lab’s auditor has voiced “substantial doubt” over its ability to continue as a going concern, but that is not expected to derail its sharemarket float.

The filing reveals that the company’s auditor, Deloitte & Touche, expressed “substantial doubt” about Rocket Lab’s ability to continue as a going concern in May.

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That was because of what Deloitte described as a “history of recurring losses from operations, negative cashflows from operations and a significant accumulated deficit”.

Vector shareholders will vote on August 20 on a proposal to merge with the Kiwi-founded business, turning Rocket Lab into a publicly-listed firm.

Vector said in its filing that it expected net losses to continue “for the next several years”.

But it said there was a significant market opportunity for Rocket Lab that it intended to capitalise on by continuing to invest aggressively.

Although the auditor’s warning may sound ominous, United States technology news website Ars Technica said the losses and warnings were unlikely to cool the appetite of investors in Rocket Lab, noting that the initial public offering would provide Rocket Lab with about US$467m in cash.

The IPO will turn more than 100 of the company’s 600 mostly young employees into millionaires on paper, with founder Peter Beck retaining at least a 12.2 per cent stake in the firm, which should have a total market capitalisation of about US$4.5b.

Most of Rocket Lab’s future investment will go into developing and building a larger range of Neutron rockets that will be capable of launching constellations of communications satellites as well as humans into space.

Rocket Lab is due to carry out its 20th orbital mission on Thursday evening, when it expects to launch a single satellite for the US Space Force from its main base on Māhia Peninsula, near Gisborne.

Watch the launch here.