Latest news with #DevonFunds
NZ Herald
5 days ago
- Business
- NZ Herald
Rocket Lab shares soar 800% despite multimillion-dollar losses
Greg Smith, head of retail at Devon Funds, said investors were looking past the lack of profitability, and there was a lot of momentum priced into its shares. 'But the company has been delivering. It is gaining huge credibility through deals with national space agencies and spending here has been ramping up. There's been the recent partnership agreed with the European Space Agency to launch satellites for constellation navigation before December. 'And there has been a string of successful launches. A rocket is being produced every 15 days, and [it has] successfully launched its 66th, 67th and 68th Electron rockets.' He said the company's upcoming, bigger Neutron medium-lift rocket was another driver of growth. If it was successful, it could unlock US$5.6 billion ($9.3b) in National Security Space Launch contracts. 'The company isn't profitable yet, so we can't really look at earnings multiples. Even to sales it is looking high at up to 10 times, but if it keeps delivering we might yet see more momentum.' Gertjan Verdickt, a lecturer of finance at the University of Auckland, said a significant portion of Rocket Lab's current valuation was based on the promise of a future that was 'both exciting and challenging to value'. 'How much will the space economy truly be worth in 10 or 20 years? How many applications will it lead to? It's difficult for anyone to grapple with. 'Because of that uncertainty, optimistic investors are willing to pay a very high price today for the potential of a massive payoff down the road. They see a leader in a burgeoning industry and don't want to miss out. 'This part of the valuation is precarious. A narrative of explosive growth and future dominance sustains it. 'If that optimism fades, even slightly, you could see a significant drop. That said, for anyone who got in early, a drop would still leave them with an amazing return.' Satellite launches, ESA deals, and a bigger Neutron rocket fuel Rocket Lab's rising credibility. Photo / RNZ He said the 'hype-driven' component of the share price made it fragile. 'If you think about it from a behavioural finance point of view, there is a lot of 'fear of missing out' going on too. 'If you missed the boat at 100%, 200% ... and you jump in late, the prices – because you are willing to buy – the stock price increases more. This leads to a momentum effect.' He said the other aspect of the share price was the company's cash flow. 'There is a real, tangible business generating real cash flows behind the stock price. 'Rocket Lab has already realised tremendous growth. Their revenue has increased significantly over the past few years, and they have a backlog of over $1 billion in signed contracts, providing a clear line of sight into future earnings. 'They have two core pillars of growth. First, their proven Electron rocket is a workhorse for the small satellite market. Second, and more importantly for the future, is their upcoming Neutron rocket, which is designed to compete with larger players like SpaceX for much bigger, more lucrative contracts. 'Additionally, they're not just a launch company. Their Space Systems division - which builds satellite components and platforms - is their biggest revenue driver. They are strategically building an end-to-end space company, and their pending acquisition of the company Mynaric is another step in that direction.' When it came to whether the 800% increase was sustainable, the level of share price was probably not, he said. 'Unless the company's growth potential is even better than what people are currently thinking. 'However, the underlying business growth is there. There is a very real and rapidly growing company here. The ultimate test will be whether its fundamental performance can grow fast enough to justify the market's sky-high expectations. That said, if the balloon pops, it can go real fast, real quick.'
RNZ News
5 days ago
- Business
- RNZ News
What's going on with Rocket Lab shares?
Photo: RNZ/ Nate McKinnon Rocket Lab may be recording multi-million-dollar losses, but its share price keeps on going up. Shares in the New Zealand-founded space company have risen more than 800 percent in the past year, to just under US$50 each. In August last year, they were changing hands for less than US$5. In its 2024 financial year, the company recorded a loss of US$33 million to US$35m, from record annual revenue of US$436.2m. Greg Smith, head of retail at Devon Funds, said investors were looking past the lack of profitability, and there was a lot of momentum priced in to its shares. "But the company has been delivering. It is gaining huge credibility through deals with national space agencies and spending here has been ramping up. There's been the recent partnership agreed with the European Space Agency to launch satellites for constellation navigation before December. "And there has been a string of successful launches. A rocket is being produced every 15 days, and [it has] successfully launched its 66th, 67th and 68th Electron rockets." He said the company's upcoming, bigger Neutron medium-lift rocket was another driver of growth. If it was successful, it could unlock US$5.6 billion in National Security Space Launch contracts. "The company isn't profitable yet, so we can't really look at earnings multiples. Even to sales it is looking high at up to 10 times, but if it keeps delivering we might yet see more momentum." Gretjan Verdickt, a lecturer of finance at the University of Auckland, said a significant portion of Rocket Lab's current valuation was based on the promise of a future that was "both exciting and challenging to value". "How much will the space economy truly be worth in 10 or 20 years? How many applications will it lead to? It's difficult for anyone to grapple with. Because of that uncertainty, optimistic investors are willing to pay a very high price today for the potential of a massive payoff down the road. They see a leader in a burgeoning industry and don't want to miss out. "This part of the valuation is precarious. A narrative of explosive growth and future dominance sustains it. If that optimism fades, even slightly, you could see a significant drop. That said, for anyone who got in early, a drop would still leave them with an amazing return." He said the "hype-driven" component of the share price made it fragile. "If you think about it from a behavioural finance point of view, there is a lot of 'fear of missing out' going on too. If you missed the boat at 100 percent, 200 percent... and you jump in late, the prices - because you are willing to buy - the stock price increases more. This leads to a momentum effect." He said the other aspect of the share price was the company's cash flow. "There is a real, tangible business generating real cash flows behind the stock price. "Rocket Lab has already realised tremendous growth. Their revenue has increased significantly over the past few years, and they have a backlog of over $1 billion in signed contracts, providing a clear line of sight into future earnings. "They have two core pillars of growth. First, their proven Electron rocket is a workhorse for the small satellite market. Second, and more importantly for the future, is their upcoming Neutron rocket, which is designed to compete with larger players like SpaceX for much bigger, more lucrative contracts. "Additionally, they're not just a launch company. Their Space Systems division - which builds satellite components and platforms - is their biggest revenue driver. They are strategically building an end-to-end space company, and their pending acquisition of the company Mynaric is another step in that direction." When it came to whether the 800 percent increase was sustainable, the level of share price was probably not, he said. "Unless the company's growth potential is even better than what people are currently thinking. However, the underlying business growth is there. There is a very real and rapidly growing company here. The ultimate test will be whether its fundamental performance can grow fast enough to justify the market's sky-high expectations. That said, if the balloon pops, it can go real fast, real quick."
RNZ News
5 days ago
- Business
- RNZ News
What's really going on with Rocket Lab shares?
Photo: RNZ/ Nate McKinnon Rocket Lab may be recording multi-million-dollar losses, but its share price keeps on going up. Shares in the New Zealand-founded space company have risen more than 800 percent in the past year, to just under US$50 each. In August last year, they were changing hands for less than US$5. In its 2024 financial year, the company recorded a loss of US$33 million to US$35m, from record annual revenue of US$436.2m. Greg Smith, head of retail at Devon Funds, said investors were looking past the lack of profitability, and there was a lot of momentum priced in to its shares. "But the company has been delivering. It is gaining huge credibility through deals with national space agencies and spending here has been ramping up. There's been the recent partnership agreed with the European Space Agency to launch satellites for constellation navigation before December. "And there has been a string of successful launches. A rocket is being produced every 15 days, and [it has] successfully launched its 66th, 67th and 68th Electron rockets." He said the company's upcoming, bigger Neutron medium-lift rocket was another driver of growth. If it was successful, it could unlock US$5.6 billion in National Security Space Launch contracts. "The company isn't profitable yet, so we can't really look at earnings multiples. Even to sales it is looking high at up to 10 times, but if it keeps delivering we might yet see more momentum." Gretjan Verdickt, a lecturer of finance at the University of Auckland, said a significant portion of Rocket Lab's current valuation was based on the promise of a future that was "both exciting and challenging to value". "How much will the space economy truly be worth in 10 or 20 years? How many applications will it lead to? It's difficult for anyone to grapple with. Because of that uncertainty, optimistic investors are willing to pay a very high price today for the potential of a massive payoff down the road. They see a leader in a burgeoning industry and don't want to miss out. "This part of the valuation is precarious. A narrative of explosive growth and future dominance sustains it. If that optimism fades, even slightly, you could see a significant drop. That said, for anyone who got in early, a drop would still leave them with an amazing return." He said the "hype-driven" component of the share price made it fragile. "If you think about it from a behavioural finance point of view, there is a lot of 'fear of missing out' going on too. If you missed the boat at 100 percent, 200 percent... and you jump in late, the prices - because you are willing to buy - the stock price increases more. This leads to a momentum effect." He said the other aspect of the share price was the company's cash flow. "There is a real, tangible business generating real cash flows behind the stock price. "Rocket Lab has already realised tremendous growth. Their revenue has increased significantly over the past few years, and they have a backlog of over $1 billion in signed contracts, providing a clear line of sight into future earnings. "They have two core pillars of growth. First, their proven Electron rocket is a workhorse for the small satellite market. Second, and more importantly for the future, is their upcoming Neutron rocket, which is designed to compete with larger players like SpaceX for much bigger, more lucrative contracts. "Additionally, they're not just a launch company. Their Space Systems division - which builds satellite components and platforms - is their biggest revenue driver. They are strategically building an end-to-end space company, and their pending acquisition of the company Mynaric is another step in that direction." When it came to whether the 800 percent increase was sustainable, the level of share price was probably not, he said. "Unless the company's growth potential is even better than what people are currently thinking. However, the underlying business growth is there. There is a very real and rapidly growing company here. The ultimate test will be whether its fundamental performance can grow fast enough to justify the market's sky-high expectations. That said, if the balloon pops, it can go real fast, real quick."
1News
22-06-2025
- Business
- 1News
What is going on with Briscoes shares?
Briscoes shares have had a boost in recent days, ahead of the company moving into the top 50 stocks on the NZX share market tomorrow. Falling share prices pushed The Warehouse out of the NZX50, and Briscoes will take its place. That means that passive managed funds that benchmark their funds to the NZX50 will snap up stocks in the company too. Its share price has lifted from less than $5 at the start of the month to $6.19 on Thursday. Greg Smith, head of retail at Devon Funds, said there had been a lot of pre-buying ahead of Briscoes moving up on Monday morning. He said that meant the bump in share price was unlikely to be so significant. ADVERTISEMENT "Going into the 50 means it is a lot more relevant to institutional managers although with Rod Duke owning nearly 80% of the stock, getting liquidity will be an issue." Greg Bunkall, data director at Morningstar, said the number of passive funds benchmarked to the NZX50 would not be large. "Maybe 10 or so share classes, both traditional managed funds and ETFs. "There may also be some of the ESG tilted options, which, depending on the screen might be impacted - then there is also the multi asset funds which have the index fund as a part of the overall portfolio." 'Self-cleansing mechanism' Dean Anderson, founder of Kernel KiwiSaver, said it was relatively unusual for stocks to move in and out of the top 50. "Every quarter, major benchmarks like the S&P/NZX 50 undergo a rebalance, testing each company's eligibility for the index and where underperforming companies can be dropped and stronger ones added. ADVERTISEMENT "This self-cleansing mechanism ensures indices stay relevant-poor performers are replaced by those that have grown in value, often overtaking the bottom-ranked company in the index. "In a small market like New Zealand, though, such changes are rare, often one or two changes in a year, making them all the more noteworthy when they happen, with the last change to the S&P/NZX 50 index rebalance occurred in December 2023." He said the Briscoes share price had already lifted 28% since it was announced it was going into the top 50. Some investors had sold shares in The Warehouse. "Globally, this isn't unusual. Studies show that stocks added to major indices like the S&P 500 often see short-term price spikes of 3% to 8% in the days leading up to inclusion, driven by speculative buying and index fund rebalancing. "However, the scale in these spikes is falling and these gains frequently fade within weeks as the initial hype subsides - which can leave some speculative investors out of pocket." He said some active manager might be trying to game the rebalance by betting on short term movements but the risks could outweigh the rewards. Sam Stubbs, founder of Simplicity KiwiSaver, said his funds were benchmarked against the top 30. He said beyond the top 30, it could be hard to buy and sell shares. He said Briscoes' presence in the index was likely to be weighted so that only 20% of the company's value was reflected because of Duke's significant holding.
RNZ News
21-06-2025
- Business
- RNZ News
What's going on with Briscoes shares?
Photo: RNZ / Simon Rogers Briscoes shares have had a boost in recent days, ahead of the company moving into the top 50 stocks on the NZX share market on Monday. Falling share prices pushed The Warehouse out of the NZX50, and Briscoes will take its place. That means that passive managed funds that benchmark their funds to the NZX50 will snap up stocks in the company too. Its share price has lifted from less than $5 at the start of the month to $6.19 on Thursday. Greg Smith, head of retail at Devon Funds, said there had been a lot of pre-buying ahead of Briscoes moving up on Monday morning. He said that meant the bump in share price was unlikely to be so significant. "Going into the 50 means it is a lot more relevant to institutional managers although with Rod Duke owning nearly 80 percent of the stock, getting liquidity will be an issue." Greg Bunkall, data director at Morningstar, said the number of passive funds benchmarked to the NZX50 would not be large. "Maybe 10 or so share classes, both traditional managed funds and ETFs. There may also be some of the ESG tilted options which depending on the screen might be impacted - then there is also the multi asset funds which have the index fund as a part of the overall portfolio." Dean Anderson, founder of Kernel KiwiSaver, said it was relatively unusual for stocks to move in and out of the top 50. "Every quarter, major benchmarks like the S&P/NZX 50 undergo a rebalance, testing each company's eligibility for the index and where underperforming companies can be dropped and stronger ones added. "This self-cleansing mechanism ensures indices stay relevant-poor performers are replaced by those that have grown in value, often overtaking the bottom-ranked company in the index. "In a small market like New Zealand, though, such changes are rare, often one or two changes in a year, making them all the more noteworthy when they happen, with the last change to the S&P/NZX 50 index rebalance occurred in December 2023." He said the Briscoes share price had already lifted 28 percent since it was announced it was going into the top 50. Some investors had sold shares in The Warehouse. "Globally, this isn't unusual. Studies show that stocks added to major indices like the S&P 500 often see short-term price spikes of 3 percent to 8 percent in the days leading up to inclusion, driven by speculative buying and index fund rebalancing. "However, the scale in these spikes is falling and these gains frequently fade within weeks as the initial hype subsides - which can leave some speculative investors out of pocket." He said some active manager might be trying to game the rebalance by betting on short term movements but the risks could outweigh the rewards. Sam Stubbs, founder of Simplicity KiwiSaver, said his funds were benchmarked against the top 30. He said beyond the top 30, it could be hard to buy and sell shares. He said Briscoes' presence in the index was likely to be weighted so that only 20 percent of the company's value was reflected because of Duke's significant holding. Sign up for Ngā Pitopito Kōrero , a daily newsletter curated by our editors and delivered straight to your inbox every weekday.
