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Non-Commoditized Launch Services Are Bullish for RKLB
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[This article has zero AI. This is a companion piece to my other article that got 1 million views here - thank you so much!🥳]
Launch Commoditization Doesn't Exist, and May Never.
Launch commoditization is a term that has been thrown around a lot recently, generally as a bear case against launch providers ($RKLB, $X, $FLY). I don't personally buy into the launch commoditization narrative for two reasons:
- Launch is not fungible
- In a duopoly or oligopoly, there is no incentive to lower prices
For commoditization to emerge would require multiple, scaled and profitable players within each market segment. I doubt we get there in <10 years, if at all. Since I wrote this article a few days ago; numerous industry analyst have come out with the same message.
Let's dig in a little deeper.
Rockets Are Not Commodities
Copper is a commodity because it is fungible. Any piece of .999 fine copper is identical regardless of where it came from, who supplied it, etc. Assuming the seller is honest about the purity, copper is copper, and the cheapest copper will do. Mesopotamian merchants be damned.
Rockets or launch are not fungible. Launch varies by payload class, orbit, schedule flexibility, reliability, contract eligibility, insurance cost, etc.
Clearly launch is not a commodity in the true sense of the word.
Is it similar to a commodity then?
The closest analogy would be the trucking industry. For all intents and purposes trucking is a priced as a commodity. If you have ever shipped anything large, like a car, across country, you'll know you can choose from thousands of providers that compete solely on price.
This is possible because there are ~50,000 trucking companies in the US (Companies with over 5 trucks. More than 10x that including owner-operators). These trucking companies all use the same trucks from a small number of vendors, run the same routes, abide by the same legal restrictions, have the same maintenance costs, the same staffing costs, etc.
There are not thousands, hundreds, or even tens of launch companies operating in the same segment.
What Would It Take for Launch to Be In a Comparable Position?
Before launch can commoditize you will need:
- Multiple players; lets say at least 3 (but more like 5+)
- Offering comparable services
- That are scaled (10+ successful launches)
- That have capacity
- That are profitable
Lets highlight the importance of each line item:
- Multiple players is self explanatory. No competition = no pricing pressure.
- Comparable services means similar payload capacity with similar schedule availability and the capability to reach the same orbits.
- Rockets that have not scaled yet come with a different risk profile. Higher insurance costs means the total cost might be much higher than the list price. Why pay for an unproven launch if a proven one is available? Maybe you pay less, but at what cost?
- It's no good having a launch provider if they have 4+ years of backlog when you need to launch in 1-2 years.
- It's easy to undercut on price in the short-term. Rocket Lab did this with Electron and regretted it. They won't make the same mistake with Neutron. Relativity Space is rumored to have secured their large backlog by offering low price deals on very flexible terms. This works short term, but long term, companies will either have to raise prices or go out of business.
Lets stress test each point against todays market reality within each segment.
Dedicated Small launch:
Scaled, profitable launch providers with capacity: 1 - Rocket Lab.
Potential new entrants:
- Astra
- Firefly
- Gilmour Space
- Isar Aerospace
Many more than have already failed or left:
- Relativity Space - Terran 1, cancelled.
- ABL - RS1, cancelled.
- Virgin Orbit - LauncherOne, bankrupt.
- Astra - Rocket 3, cancelled and bankrupted.
Rocket Lab is currently the sole provider in their market segment and has pricing power. Can that change? Yes. Will it? Remains to be seen but the odds don't look good.
How long will investors continue to fund companies with such a low probability of success? ABL already pivoted to military. Astra seems to be trying the same.
Can those that succeed technically, become viable, long term profitable businesses?
There is no evidence that Rocket Lab is under pricing pressure or is likely to be in the future. In fact, Electron prices have risen from $7.5M to $8.2M over the last few years.
Medium & Heavy Launch:
This is where things look a lot more competitive; however the number of scaled, profitable launch providers with capacity is still arguably only one today - Falcon 9. In the near future, will medium and heavy launch each reach 3 or more scaled players with heritage and capacity?
Ariane 6 has 30+ flights in their backlog and did 4 launches in 2025. With their 2nd launch of 2026 planned for tomorrow (April 28) they're on pace for 6 launches in 2026 - that's 5 years to clear the existing backlog and they just had to go through a restructuring after being technically bankrupt as of end 2025.
Vulcan Centaur is in an ever worse position with 70 launches in backlog and only 4 launches in 3 years. The rocket is currently grounded following 2 SRB anomalies and the Space Force has moved launches over to Falcon 9.
Blue Origin is in a similar position with a healthy backlog but a shaky, albeit impressive, start to their launch campaign. 1 in 3 failures for a new vehicle is okay, if it becomes 2 in 4 things shift.
The bottom line for the heavy launch segment is companies struggling to execute. Cutting prices in a race to the bottom does nothing to help any of these launch providers when their challenge is technical execution, not lack of demand.
Firefly, Relativity Space, Stoke, and Rocket Lab are hoping to bring their medium lift vehicles Eclipse, Terran R, Nova, and Neutron to market, respectively. These are all coming up against the Falcon 9.
Let's assume 2 out of 4 make it to commercial scale, giving us Flacon 9 and two of the upcoming new medium lift launch vehicles.
What incentive is there to cut prices in a race to the bottom? Throughout history oligopolies drive prices higher, not lower - Why? Game theory. If one cuts prices, the other two will have to cut prices to match, this hurts everyone, and since everyone is aware of this, no one wants to cut. Why cut prices when you can maintain you existing price level.
You can try to undercut the competition to put them out of business. This favors companies with strong capital efficiency, see SpaceX and Rocket Lab. Even then, given the technical risks companies face, better to let the competition put themselves out of business through poor execution.
The Bottom Line
We do not have the market conditions for commoditized pricing to emerge. Even if we get, there is no incentive for a race to the bottom. It's proven game theory.
The Elephants in the Room - Starship/Rideshare/Space Tugs
There is no doubt that for large payloads launched on Starship the cost per KG will be lower than say, Falcon 9. That's simple economies of scale and great news for those that need it.
Space tugs and rideshare show up here too - but space tugs are added cost, added risk, and schedules are still tied to rideshare availability. Peter Beck says the math doesn't work. Impulse Space and True Anomaly obviously see a market there. As yet, it's unproven and costs are an unknown. What we do know is it means a second vehicle and a second operator, greatly changing the risk profile of the mission.
Peter Beck has pointed out that rideshare is useful to a point but that it actually drives demand for dedicated launch - proving the two services are again, not fungible. He highlights three customers that started launching their demo satellites on Falcon 9 rideshare before moving to dedicated launch with Rocket Lab. The companies are Kinéis, IQPS, and Synspective.
Summary
The market conditions required for commoditized pricing to emerge simply do not exists today and to exist in future will require a level of success that the industry simply has never delivered on.
For the companies that do make it, there is no incentive to cut prices in a race to the bottom. Launch costs for dedicated launch on Falcon 9 and Electron - the two most frequently launched vehicles in the world (ex-China) - have risen over time, not fallen.
Maybe in 20 years the world will look different, but for the decade ahead, I won't be making investment decisions reliant on falling launch costs.
Evidence from industry analysts
April 28, Impulse Space, COO, Eric Romo, strongly echoed my sentiments live on NYSE Space & Defense Special. Eric was SpaceX employee #13 and at Impulse Space he stands to benefit from falling launch costs, yet his bias is rising costs. Here are the quotes:
"Assuming that you're going to crater the prices in the launch market because of Starship, I think, is a bad assumption in the near term. Long term maybe... but in the long term we're all dead"
On Neutron, Terran R pushing prices down "I'm not so sure... I think pricing if anything is going to float upward..."
"... makes me nervous, any business plan that starts with like, when Starship enables 200KG price to LEO... I think is going to be hard in the near term..."
Also April 28, Jack Kuhr, Director of Research at Payload Space had the following comments in an interview with Dave G Investing.
On Starship "What's their incentive for launching customer payloads? Why would SpaceX even want to launch commercial payloads when their revenue from Starlink, xAI, and their own orbital datacenters is going to be so significant, that lower margin customer payloads might just be a nuisance for them"
On Falcon 9 pricing "They're up 40% in 5 years... they are increasing pricing which is great for Rocket Lab & Firefly".
Long $RKLB
Positions:
3,680 RKLB Shares
69x Jan 28 $75 Calls
The poster lays out a bullish thesis around the commercial space launch market: so-called “launch service commoditization” does not currently exist and may not emerge over the next decade, so companies such as Rocket Lab (RKLB) that have reliable launch capability, capacity, and a track record of customer execution should not simply be valued under the bearish narrative that “launch prices will be crushed by Starship, rideshare, or new entrants.” The poster’s core evidence chain is that launch is not fully substitutable like copper or trucking; customers choose suppliers based on payload quality, target orbit, launch window, reliability, insurance costs, eligibility for government contracts, and scheduling. For true commoditization to emerge, at least several companies in the same segment would need to simultaneously have comparable services, scaled successful launches, available capacity, and profitability. In the current dedicated small-launch market, the poster believes only Rocket Lab’s Electron meets the conditions of being “scaled, relatively reliable, and possessing pricing power,” while the medium/heavy launch market is also mainly dominated by SpaceX Falcon 9 in terms of scale and reliability, with Ariane 6, Vulcan, New Glenn, and others still constrained by capacity, technical maturity, or backlog. The poster further argues that even if two or three future medium-lift rockets such as Neutron, Terran R, Eclipse, or Nova succeed, the industry is more likely to form an oligopoly than a price war, because launch demand is strong, failure costs are high, and suppliers have no incentive to proactively cut prices for low-margin customers. Starship, rideshare, and space tugs could indeed reduce per-kilogram costs for some large-payload or rideshare missions, but they cannot fully replace dedicated launches that require specified orbits and time windows, and space tugs introduce additional operators, mission complexity, and risk. The poster cites public views from Impulse Space COO Eric Romo and Payload Space research lead Jack Kuhr as external support for the claim that one should not assume Starship will collapse launch prices in the near to medium term, and that Falcon 9 prices have in fact been rising. In terms of positioning, the poster explicitly discloses being long RKLB, holding 3,680 shares of RKLB stock and 69 Jan 2028 $75 calls, and later says in the comments that the LEAPS position increased to 71 contracts. The post has no user-provided image attachment, but in the comments the OP says they had posted a position screenshot link. The valuation framework is mainly based on industry structure and pricing power rather than short-term EPS or DCF. The implied assumptions include that global launch demand will continue to grow, reliability and scheduling will remain scarce, Rocket Lab’s Neutron can enter a key validation phase around 2026, and SpaceX will not use Starship to deliberately sacrifice commercial launch pricing. The most important weaknesses are that the poster connects “not fully commoditized” to “long-term price increases and reasonable RKLB valuation” rather quickly, underestimating risks such as Rocket Lab’s own Neutron delays, capital expenditures, potential refinancing, technological breakthroughs by competitors, subsidy-driven competition from governments, and the possibility that Starship could change the industry cost curve if large-scale reuse succeeds. In addition, the poster’s descriptions of certain companies’ status and launch cadence clearly reflect a pro-RKLB stance and need to be cross-checked against official disclosures and actual launch data.
The overall comment sample is not very large, with 22 top-level comments and 58 total comments captured, and WSB contains many short remarks, memes, and position-flexing comments, so this should only be viewed as limited community feedback. Most substantive comments are positive toward RKLB. The main supporting point is that launch services are more like a high-barrier, reliability-driven form of specialized logistics than a commodity that competes simply on per-kilogram pricing. One highly upvoted comment argues that suppliers able to deliver consistently at scale will earn a premium, and that even if competitors enter, they have no reason to start a price war while demand is growing. The OP responds that this is exactly the simple logic, while mocking market expectations that Starship could reach as low as $20/kg as overly absurd. Another highly upvoted thread is the OP’s own supplemental position screenshot, where they say their LEAPS increased from 69 contracts to 71. Replies underneath are mostly emotional support such as “long-term hold” and noting that the position is still being shown on a red day, reinforcing that the poster is a long-term RKLB bull rather than a neutral observer. Opposing or cautious views mainly focus on two points. First, some question “how much stuff actually needs to go to space,” arguing that space demand may not be large enough, while also noting that RKLB’s Neutron has been delayed multiple times, the company has diluted shareholders multiple times, and the stock price has already run too far. The OP responds that dilution since IPO has been around 4% CAGR, while revenue per share has grown around 70% CAGR, calling it the “right kind of dilution,” and says demand mainly comes from communications constellations and defense, so demand is not the core issue. Second, some remind readers that Neutron has not yet proven it can provide stable medium-lift launch, that it requires major resource investment, and that disappointing results could cause the stock to fall sharply. Other replies emphasize that Neutron is a medium-lift launch vehicle and that many companies or countries do not want to rely entirely on SpaceX, while the U.S. government also does not want a monopoly to form. Regarding near-term earnings, one comment asks about the immediate impact of Q1 ER on RKLB’s share price. The OP clearly says they do not focus on short-term trading and believes the market is most concerned with whether Neutron maintains its 2026 first-launch guidance, while contract announcements matter more than EPS. An unexpected positive EPS could be a first in the company’s history, but it is not the main buying logic. Regarding other space stocks, the OP says they are extremely bullish on space overall, but that companies differ significantly. They are positive on Varda, view ASTS as high-risk/high-reward while acknowledging its high ongoing launch costs, and are more cautious on FLY: although they recognize its lander and SciTec businesses, they believe the launch business is too hard and that Firefly’s technical capability and capital efficiency are far below Rocket Lab’s, so they do not hold FLY. The comment-section consensus is that the RKLB bull narrative has strong support within the community, and people broadly accept the logic that “launch reliability and capacity are scarce.” The disagreement lies in Neutron execution risk, whether the current stock price has already priced in too much, and whether end-market space demand can support growth over the next decade. Meme comments such as “RKLB bias,” “Ticker up,” and “$1000 EOY” are mainly emotional expressions and should not be treated as serious analysis.
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