As the leader of several industry-leading companies, Elon Musk has many rivals across multiple sectors.
Coverage often centers around the automakers that have chipped away at Tesla’s (TSLA) share of the global EV market.
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However, Musk’s other companies, such as SpaceX and xAI, also have rivals who are working hard to pull ahead in the races to conquer the artificial intelligence (AI) and space exploration markets.
The opportunity for growth in these industries is significant. But one of Musk’s primary competitors may have suffered a major setback recently.
A fast-growing company that is often seen as posing a threat to SpaceX has been accused of illicit activity that could negatively impact investors.
The SpaceX Starship Flight 3 Rocket launches at the Starbase facility on March 14, 2024 in Brownsville, Texas. One of the company’s top rivals may be in trouble, according to a recent short report. (Photo by Brandon Bell/Getty Images)
Short sellers are closing in on one of Musk’s top competitors
Yesterday, short selling firm Bleecker Street Research released a damning report on a company that, up until now, caught the attention of Wall Street this year for the right reasons.
In it, the report’s authors called out Rocket Lab USA (RKLB) , a trendy space exploration and technology company that has enjoyed impressive growth this year. Despite losing some momentum lately, RKLB is up more than 360% for the year due primarily to investor enthusiasm for the space race.
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The short seller levies strong accusations against Rocket Lab, alleging that the company has fundamentally misled investors on plans to launch its Neutron rocket. Bleecker Street cites this high-profile launch as a notable growth driver for RKLB stock, but argues that it will unlikely happen in mid-2025, as the company has claimed.
“Rocket experts we spoke to put the timeline of a rocket launch from mid-2026 to mid-2027, a one to two year delay,” the report states.
This is just the tip of the iceberg. The authors then outline the many aspects of Rocket Lab’s Neutron program that need to be improved for the launch to happen on schedule. These include important factors such as engine development, engine and structure production, and launch pad construction.
Bleecker Street’s team notes that it conducted extensive interviews with 23 industry experts, including former engineers and executives from Rocket Lab.
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The report predicts that “With a 2026 or 2027 Neutron launch, it appears RKLB won’t be able to onboard for a year or more to its most lucrative single source of potential contracts, National Security Space Launch’s (NSSL’s) Phase 3 Lane 1 program.”
Is it gonna be a long, long time before Rocket Lab can succeed?
News of the short report sent RKLB stock down yesterday, as the accusations sparked anxiety about the company’s future among investors. While shares have rebounded today, Rocket Lab’s future remains uncertain, especially if the report’s allegations drive negative speculation.
As Bleecker Street’s researchers note, Rocket Lab would face a severe liquidity threat if it generates less revenue than expected in the face of an ongoing cash burn, which they seem to see as a likely scenario for the company.
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“Without Neutron, RKLB’s revenue goals for space don’t add up,” the short report states. “SpaceX took a huge bite out of the market for RKLB’s small Electron rocket by offering cheaper satellite rideshare aboard Falcon 9. Electron and Space Systems alone don’t come close to supporting the company’s current valuation.”
Given the zero-sum nature of financial markets, bad news for Rocket Lab could end up being good news for SpaceX, especially if Musk’s proximity to President Donald Trump helps the space exploration company procure lucrative contracts, which experts predict could easily happen.
Rocket Lab did not respond to an inquiry from TheStreet regarding its position on the short report.
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