Prediction: Rocket Lab gets a new neighbor in SpaceX

Five years ago — just before the IPO — a small rocket company and rival to SpaceX Rocket Lab USA (RKLB 12.58%) he had an announcement to make.

Despite its name, Rocket Lab was primarily a New Zealand company at the time. Its founder lived there. He launched his missiles FROM There. Incidentally, the only launch pad was located there. But fresh off its tenth successful rocket launch, Rocket Lab was eager to compete with America’s most famous rocket company, SpaceX, to try to win more launch contracts from American customers.

This would be difficult, of course, because SpaceX has had the advantage of winning commercial launch contracts with the US and US government. Specifically, SpaceX was located in the US — right next to most of its customers — reducing its cost of delivering payloads to SpaceX for payload integration and launch.

How could Rocket Lab level the playing field with SpaceX? They probably wouldn’t have much luck convincing US customers to move to New Zealand. So Rocket Lab decided to build a launch pad on Wallops Island, Virginia.

But it seems two can play that game. As we just learned, SpaceX may be planning to move The rocket lab backyard too.

Day fellow spaceman!

As Reuters reported last week, SpaceX is seeking permission to land a Starship rocket off the Australian coast, and this could be “the first step toward a greater presence for Elon Musk’s company in the region.”

The request follows a successful fourth test flight of SpaceX’s Starship rocket and Super Heavy booster in June, in which the Starship performed a “water landing” in the Indian Ocean, somewhere northwest of Australia. Logically, then, SpaceX’s request likely refers to a subsequent test flight that follows a similar trajectory to that used in Test Flight 4 (to minimize variables between tests). Once again, the goal would be to land near Australia (this time on a landing barge). The missile will be flown to Australia for inspection and then likely sent back to America.

Reuters notes that the plan could also be a first step toward creating a point-to-point system for using Starship to quickly deliver cargo and passengers around the globe. We usually think of rockets as walking FROM Earth TO somewhere other than Earth. But in the era of reusable rockets that launch and land back on Earth, there’s really no reason why they couldn’t be used for point-to-point transportation, as airplanes already are. In fact, Elon Musk has already been thinking about such a scheme for almost a decade. And in 2021, the US Air Force backed the plan with an initial budget of $47.9 million for a feasibility study.

But I think Musk’s plans could be even bigger than that.

Will Starbase go global?

Consider that right now all of SpaceX’s spacecraft are launched from one location: SpaceX’s “Starbase” in Boca Chica, Texas. But there’s good reason to believe that SpaceX might want to build a spaceport in Australia from which to launch and retrieve rockets — and perhaps even a factory to build starships on site. Rocket Lab’s success has already shown that Australia (or at least its smaller neighbor) is a good location to launch rockets from, with a big, beautiful ocean to the east where any stray rocket can land safely.

Furthermore, for the same reasons that Rocket Lab might want to set up shop in the US (to be closer to US customers and to reduce their shipping costs), SpaceX might find it very attractive to set up a stellar Australian base on the other side of the globe, all the better to win business from Asian customers.

What this would mean for Rocket Lab investors

Suffice it to say, this might not be great news for Rocket Lab, whose biggest launch customer is in Asia (Japan, to be exact) and who might not enjoy the added competition. In the Asian market, Rocket Lab already has to contend with low-cost leader ISRO in India, which charges only three or four times Rocket Lab’s price to launch payloads 10 times larger.

In addition, however, Rocket Lab is developing a reusable Neutron rocket to compete with Starship – and Neutron having a larger payload capacity than ISRO’s PSLV rocket – at least this will be a two-horse race if and when SpaceX establishes a launch site in Australia.