Mickelberry Capital

By Mickelberry Capital

Rocket Lab (RKLB) is one of those stocks the market wants to believe in. Space, innovation, government contracts, reusable rockets—it checks all the emotional boxes. But investing (and especially shorting) isn’t about good stories. It’s about valuation, cash flow, execution risk, and expectations.

From our perspective, RKLB is a classic case of future potential being priced as present reality. That disconnect is exactly why we’re short.

1. The Valuation Assumes Perfection

Rocket Lab is still a business that:

• Burns cash
• Operates in a capital-intensive industry
• Has not proven consistent profitability
• Competes against far larger, better-funded players

Yet the market continues to price RKLB as if it’s already a dominant, scalable aerospace company. The multiple investors are paying today assumes:

• Successful Neutron execution
• Flawless scaling
• Margin expansion in a brutally competitive industry
• Continued government and commercial demand without disruption

That’s not investing—that’s betting on best-case outcomes.

When expectations are that high, even good results can lead to downside.

2. Cash Burn and Capital Risk Are Being Ignored

Space is expensive. Full stop.

Rocket Lab requires continuous capital for:

• R&D
• Manufacturing
• Launch infrastructure
• Talent
• Long development timelines

This creates a dangerous dynamic for equity holders:

• Ongoing dilution risk
• Dependence on favorable capital markets
• Sensitivity to interest rates and funding conditions

In an environment where capital is no longer free, companies that rely on future financing get punished. RKLB’s business model is not built for tight monetary conditions, yet the stock trades like those conditions don’t matter.

They do.

3. Execution Risk Is Massive—and Underpriced

The Neutron rocket is the linchpin of Rocket Lab’s bull case. If it succeeds, the upside narrative makes sense eventually. If it’s delayed, over budget, or underperforms, the downside is severe.

History tells us:

• Aerospace timelines slip
• Costs rise
• Technical hurdles are underestimated

The market is currently treating Neutron as a near-certainty rather than a high-risk execution milestone. That asymmetry favors the short side.

4. Competition Is Ruthless, Not Romantic

Investors love to frame space as a growing pie. What they forget is who already controls the oven.

Rocket Lab isn’t competing in a vacuum. It’s up against:

• SpaceX’s scale and cost advantages
• Government-backed incumbents
• New entrants willing to burn capital aggressively

Margins in launch services are not guaranteed. Differentiation is difficult. Pricing power is weak. That reality rarely shows up in RKLB’s valuation—but it always shows up in earnings.

5. The Stock Trades on Hope, Not Numbers

RKLB’s price action is driven more by:

• Headlines
• Announcements
• Long-term narratives
• Retail enthusiasm

Than by:

• Free cash flow
• Sustainable margins
• Return on invested capital

That’s fine in bull markets. It’s dangerous everywhere else.

When sentiment shifts, stocks built on hope fall faster than investors expect.

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Our Positioning

We are short RKLB because:

• The valuation discounts too much success, too soon
• Cash burn and dilution risk are underappreciated
• Execution risk is mispriced
• The competitive landscape is harsher than the narrative suggests

This is not a statement that Rocket Lab will fail as a company. It’s a statement that the stock does not justify the optimism embedded in its price.

As investors, our job isn’t to fall in love with stories. It’s to protect capital and exploit mispricing.

Right now, RKLB looks like one of them.