5 AI steps to research Rocket Lab in 15 minutes
Researching stocks at Mach 5
Welcome to our first article!
The goal of this newsletter is simple: save hours on investing research.
How:
By exploring the best prompts and workflows
By reviewing the newest AI Tools and software
By building our own “agent” to help us make better investing decisions
The “rise of AI” gives us 2 paths:
Embrace it, and stay on top
Ignore it and know that others are using it
If you’re reading this, I bet you’re in the first camp.
I’m glad you’re here.
Let’s take this journey together!
Consider this.
You look at 50 companies in a year. You pick 10 and build a portfolio.
What if you could study 500 companies in a year and pick 10 of them?
Would that last portfolio perform better?
It probably would.
Humans rank through comparison. You’re thinking of buying a new computer or car, and spend hours and hours comparing different models, to finally come to the best price-quality product you want.
Why not do the same thing with stocks? It looks like this:
But there’s a problem.
Your time is precious.
Maybe you have 1 hour, or maybe 8 hours every day for research. It doesn’t matter. You don’t want to spend hours on a stock, only to have to put it aside and say:
Nah, this is not for me.
Imagine your process is like mine: In 3 phases. You want to go fast through the first phase. Slower through the second. And once you finally find something interesting, only then do you go deep.
That’s efficiency.
The birth of LLMs now gives us a tool to accelerate our process. Especially the number of companies we can go through in that first phase.
Let’s fire up that research rocket!
This sequence of prompts will help you analyze any stock in the span of 15 minutes.
I picked Rocket Lab. It’s been on my list for a long time. Let’s dive in.
Step 1: Breaking down the Business Model
The first step is to understand the business model and then decide whether it is in your circle of competence or too hard to understand. To break down the business model, we can use the following prompt and put it into ChatGPT:
# Your Role
You are an experienced equity analyst. You search for the truth, weeding out the subjective from the objective.
# The data
Fetch and integrate publicly available real-time data. Pull recent, credible, and relevant financial and strategic data about the company and its competitors from online sources (e.g. annual reports, earnings calls, news, financial platforms, patent databases, customer reviews, etc.).
# Your Task
The company we are researching today is called Rocket Lab, which is publicly traded with the ticker RKLB.
I specifically want an answer to these 3 questions:
How does this company make money?
What does it need to do to generate its business?
Is it a capital-intensive business?
# Output Format
Please explain it to me like I’m a 10-year-old.
Provide an example to illustrate the business model.To see the complete prompts and feedback for all 5 steps, click here:
ChatGPT provided us with the following output:
How does this company make money?
Rocket Lab makes money mainly in two ways:
a) Launch Services
Rocket Lab operates rockets (like Electron) that carry satellites into space for customers — both governments and private companies.
Customers pay a fee for each launch (for example, around $7–8 million per Electron launch). (easymarketanalysis.com)
These fees show up as revenue when a launch is completed.
b) Space Systems
Rocket Lab also designs, builds, and sells space hardware (like satellite platforms, components, and mission services).
It gets paid to manufacture satellites and parts, often through multi-year contracts that give more predictable long-term revenue.
Space Systems has grown to be the largest contributor to total revenue (about ~70% recently). (Forbes)
✔ Combined: These two segments bring cash into the company — launches pay when rockets fly, and space systems pay across manufacturing and service contracts.
What does it need to make money?
To generate revenue, Rocket Lab must do three key things:
a) Build and fly rockets
Engineering and manufacturing of rockets like Electron and (in the future) Neutron.
Launch infrastructure — launch pads, ground systems, range operations — must be maintained and operated. (Forbes)
b) Manufacture satellites and space hardware
Production facilities, suppliers, and engineering teams must build satellite components, spacecraft platforms (e.g., Photon, Flatellite), and mission services. (easymarketanalysis.com)
c) Sign contracts and deliver on them
Government and commercial agencies must commit to launching space systems contracts.
Rocket Lab then executes those contracts — meeting timelines, performance expectations, and compliance for complex space missions.
Without engineers, factories, launch sites, and reliable execution, the company cannot deliver launches or space systems.
Is it a capital-intensive business?
Yes — very capital-intensive.
Rocket Lab spends huge amounts of money upfront on:
Rocket R&D and manufacturing (materials, engines, structures)
Launch pads and infrastructure (sites in New Zealand and the USA)
Satellite production facilities
Hiring engineers and specialists
These costs happen before revenue arrives from customers. That’s why Rocket Lab operates at a loss today — it spends more than it earns while growing its capabilities. (Value Sense Blog)
And let’s also show the “simple example” we asked it to give:
This is typical for space companies: high fixed costs and long development cycles. It’s analogous to needing a very expensive factory or a fleet of vehicles before you can start selling goods.
➡️The takeaway: So far, this business model is similar (but not quite) to aircraft manufacturers like Airbus and Boeing, but vertically integrated and smaller. The key difference would be that Rocket Lab also operates the vehicle, whereas Airbus mostly sells planes and lets airlines fly them. Although this isn’t a capital-light business (quite the opposite), it has high barriers to entry and only allows a few players in the market, which brings us to…
Step 2: Find out what the industry looks like
In this step, we look at what makes the company unique amongst its competitors and try to get a hold of what the industry looks like.
Here is the prompt:
Does their business model show signs of counter-positioning towards established businesses? How many other companies are there out there that are similar to Rocket Lab? If there are only a few, why is that? Are there any particular barriers to entry? Why does the establishment not replicate what this company is doing?Note: This is a simple prompt, but you already primed the LLM with the first one, so this is good enough.
And here is the feedback
Counter-Positioning vs. Established Aerospace
a) Focus on Small Launch with Vertical Integration
Rocket Lab deliberately targeted a niche — small satellite orbital launches — which was underserved by the traditional aerospace players (like United Launch Alliance, Arianespace, or Russia/China state providers) that historically focused on:
heavy or medium lifts,
large government contracts,
expensive, bespoke engineering projects.
b) Nimble Cost Structure & Tech-First Engineering
Unlike legacy players (e.g., Boeing/LMT via ULA, NASA contractors), Rocket Lab uses:
modern manufacturing like 3D-printed engines,
iterative software & automated design,
private capital incentives,
to reduce costs and increase launch cadence — not large, long multi-year procurement cycles. (Porter’s Five Forces)
How Many Real Competitors Exist?
SpaceX — Dominates larger payload & rideshare launches globally. (Porter’s Five Forces)
Blue Origin (New Glenn) — Aimed to take on heavier markets but has not reached mature cadence yet. (Le Monde.fr)
United Launch Alliance (ULA) — Legacy provider with larger rockets, not small dedicated launches. (Wikipedia)
Firefly Aerospace — Developing similar small-to-medium launch rockets. (Ars Technica)
Relativity Space, Stoke Space, Isar Aerospace, Orbex, Astra, etc. — Early or development stage, many with no consistent commercial flights yet. (Wikipedia)
Why Are There So Few? Barriers to Entry
The commercial launch market is one of the most capital-intensive and technically difficult sectors in modern industry. The main barriers include:
Massive Capital Requirements
Technical Complexity
Regulatory & Licensing Hurdles
Economies of Scale & Data Advantage
Market Demand Reality
Why Do Establishments Not Simply Replicate This Model?
a) Inertia & Legacy Business Models
Big defense/aerospace incumbents are structured around traditional programs and large contracts. They cannot pivot quickly or reduce costs without major organizational change — even if the idea works. (The Guardian)
b) Risk Tolerance & Culture
Rocket Lab and SpaceX operate more like Silicon-era tech engineering firms, tolerating iterative risk and quick learning. Legacy Aerospace has historically avoided failure at all costs. (Barron’s)
c) Scale & Strategic Focus
Large incumbents often rely on government budgets and strategic defense work, where price competition and innovation cycles differ vastly from the small-sat launch segment.
➡️The takeaway: Ok, so Rocket Lab has entered an industry with high barriers to entry, and it has signs of counterpositioning, with a niche focus within the market.
So far so good.
Step 3: Competitive Dynamics
To get more insights about how Rocket Lab will be able to defend its position and become one of the few players once the market matures, I will use Hamilton Helmer’s 7 Powers with the following prompt: (the actual prompt is huge). You can copy it through the button below.
Evaluate the company against each of Hamilton’s 7 Powers:
1. Scale Economies
2. Network Economies
3. Counter Positioning
4. Switching Costs
5. Branding
6. Cornered Resource
7. Process PowerThe feedback:
Scale Economies
Assessment
🟡 ModerateCompetitive Context
Compared to Astra or Isar Aerospace, Rocket Lab has superior scale and reliability. Compared to SpaceX, Rocket Lab is clearly subscale. Scale helps Rocket Lab survive — it does not yet dominate.
Network Economies
Assessment
🔴 WeakCompetitive Context
Unlike satellite constellations (e.g., Starlink) or software platforms, no launch provider in the industry enjoys true network effects. This is a structural industry limitation, not a Rocket Lab failure.
Counter Positioning
Assessment
🟢 StrongCompetitive Context
This mirrors SpaceX’s early counter-positioning vs. Boeing/Lockheed. Today, Rocket Lab occupies a similar role one tier down the payload stack. Most incumbents still haven’t meaningfully replicated this model.
Switching Costs
Assessment
🟡 Moderate
Competitive Context
Switching costs are higher than in commodity industries, lower than in enterprise software. Rocket Lab’s reliability record strengthens this power relative to newer entrants.
Branding
Assessment
🟡 ModerateCompetitive Context
Stronger brand than Astra, Firefly, and most European startups. Significantly weaker than SpaceX, which has become the default launcher in many customers’ minds.
Cornered Resource
Assessment
🟡 Moderate
Competitive Context
Compared to early startups, Rocket Lab has meaningfully cornered executional know-how. Compared to SpaceX, its resource depth is shallower and less defensible long-term.
Process Power
Assessment
🟢 Strong
Competitive Context
This is Rocket Lab’s strongest power, second only to SpaceX in the commercial launch sector. Legacy aerospace struggles here the most.
🔍 Bottom-Line Strategic Takeaway
Rocket Lab’s moat today rests primarily on counter-positioning and process power — not scale or networks.
That makes it defensible against new entrants, but still vulnerable to SpaceX’s overwhelming scale if market segments converge.
➡️The takeaway: Now that I have a good overview of what competition looks like and know that Rocket Lab’s biggest strength is the process power or execution, it is essential to screen the management in the next Step.
Step 4: Quality of management and its incentives
The prompt I use to assess the quality of management:
Decide if management’s incentives align with small shareholders. Render a verdict (Aligned / Mixed / Misaligned) with hard evidence. Score these 8 areas (0–2 each; 16 max):
Ownership & Skin-in-Game
Pay Design
Pay Metrics Fit
Dilution & Equity Plan
Capital Allocation Record
Per-Share Outcomes
Governance & Shareholder Rights
Integrity & Culture The feedback:
🎯 Mixed — Management incentives only partially align with small shareholders.
There are meaningful stock incentives and insider ownership, but dilution risk, heavy equity compensation, and some structural governance features reduce alignment.
📊 Scorecard
TOTAL SCORE: 8/16 — Mixed alignment
➡️I cut some of the feedback to focus on the essential parts. In my investment book, the alignment seems good; the only thing bothering me is the SBC, but this should come down as a percentage of revenue in the future.
Step 5: Understanding the investment thesis
The last step before deciding if I want to dive deeper or not is to understand what sentiment is driving the stock at the moment. This is essential as it will reveal what you have to believe or disbelieve in order to make the investment work.
The Prompt:
Create a one-page report on Rocket Lab (RKLB) that covers the following sections:
1) Recent Developments (3–5 bullets)
2) What Bulls Say (3–5 bullet points)
3) What Bears Say (3–5 bullet points)The feedback:
Recent Developments
Record Revenue & Margin Growth: For Q3 2025, Rocket Lab reported $155 M in revenue (+48% YoY) and a GAAP gross margin of 37%, its highest yet, with guidance of $170–180 M for Q4 2025. This reflects broad demand across launch services and space systems. (GlobeNewswire)
Launch Cadence & Contracts: The company achieved 17 dedicated Electron launch contracts in Q3 and is on track to exceed 20 total launches in 2025, including HASTE hypersonic test missions. (GlobeNewswire)
Strategic Acquisitions & Expansion: Rocket Lab completed the $325 M Geost acquisition, expanding capabilities into national security payloads, and continued M&A to strengthen its space systems portfolio. (GlobeNewswire)
Neutron Rocket Milestones: Launch Complex 3 is operational for the medium-lift reusable Neutron rocket, with initial arrivals and qualification testing targeted for Q1 2026, moving toward a debut flight. (GlobeNewswire)
What Bulls Say
Strong Revenue Growth & Backlog: Bullish investors highlight record revenues and robust backlog fueling growth visibility, with extended guidance and margin expansion as evidence of demand strength. (Q3 2025 $155 M, +48% YoY) (GlobeNewswire)
Launch Dominance & Operational Reliability: Rocket Lab’s Electron rocket is a proven small-launch workhorse, with record cadence and industry-leading reliability, validating its execution excellence. (Reddit)
Strategic Defense Contracts & M&A: Large government awards (e.g., U.S. Space Development Agency satellite contracts), plus the Geost acquisition, position Rocket Lab as a vertically integrated national security partner. (Investors)
Medium-Lift Growth via Neutron: The Neutron rocket’s near-term debut offers a step change in addressable market and revenue per launch relative to small-sat missions. (Nasdaq)
What Bears Say
Profitability Still Elusive: Despite revenue growth, Rocket Lab remains loss-making on Adjusted EBITDA and net income, with projected losses continuing in the near term. (Q4 2025 adjusted EBITDA loss expected) (GlobeNewswire)
Capital Intensity & Dilution Risk: Heavy investment in Neutron, M&A, and space systems raises cash burn and share count dilution, potentially pressuring per-share metrics until profitability is firmly established. (GlobeNewswire)
Competitive Pressure: The space launch market remains competitive, with incumbents like SpaceX dominating larger payload segments and exerting pricing pressure, limiting Rocket Lab’s pricing leverage. (Nasdaq)
Neutron Execution Risk: The medium-lift Neutron rocket is a strategic pivot but carries developmental and execution risk, with timing and certification uncertainty potentially impacting valuations. (Nasdaq)
Valuation Volatility: Despite strong rallies, the stock has exhibited significant volatility and may reflect speculative flows rather than fundamentals, with valuation multiples potentially stretched. (AInvest)
Conclusion
In 15 minutes, we’ve learned:
What the business model looks like
It entered a high barrier-to-entry industry with only a few but strong competitors
It shows clear signs of counter-positioning towards the incumbents and process power
Management incentives are “reasonable,” although, as is typical with these types of companies, we need to look at how SBC evolves
Strong backlog and revenue growth, but profitability is still absent, while valuation remains stretched
I would complement such an analysis with some metrics from fiscal.ai.
It makes no sense to look at profits, as there are none. The only sensible metrics are EV/Sales or maybe EV/Gross Profits complemented with the expected growth.
EV/Sales of 84 divided by 42% expected growth = EVSG = 2
That’s expensive. (Note for ASTS, the same calculation gives us 2.7 - even more expensive)
Rocket Lab is an interesting company. It is within my circle of competence. As an engineer, I would love to own this company, but it’s too expensive.
We’ve also seen that one powerful feature is to use AI early in your research funnel.
This first article was the appetizer. We’ll apply prompts from physics (Richard Feynman) and psychology (mental models) to go faster and deeper inside these companies.
We’ll look at the newest tools, like Clawdbot (or is it Moltbot 😉), and check if they can help us save time and make money.
Until soon!
Kevin