It's official: Mars Sample Return (MSR) is DOA -- and Rocket Lab (RKLB 6.45%) investors are not at all happy about it.
As Science.org reported earlier in the month, the U.S. House and Senate have agreed on a series of appropriation bills that will help to restrain the federal budget deficit, but at the cost of cutting hundreds of millions of dollars from the budgets of NASA, the National Science Foundation, and other science-focused agencies.
Among the highest profile casualties of the cutting: MSR.
Image source: Getty Images.
What is MSR -- or what was MSR?
For the past five years, ever since arriving at the Jezero Crater on Mars on Feb. 18, 2021, NASA's Perseverance rover has been tooling around, collecting air, soil, and rock samples for analysis back on Earth. It's got nearly three dozen test tubes filled so far, and the time is fast approaching when we really should be sending someone along to collect them.
That's what MSR would have done.
Under the Mars Sample Return project, NASA proposed sending a rocket to Mars, landing there, collecting samples, and returning them to Earth. (Hence the name.) The problem, as is so often the case with these kinds of ideas, was the cost.
NASA estimates put the total cost of MSR at $8 billion to $11 billion, and predicted it would take 16 years to complete. For over a year, Rocket Lab has been trying to convince NASA that it could do the work cheaper -- and faster. At one point, it appeared the space agency might be willing to listen, and it awarded Rocket Lab a tiny contract to at least study the problem and develop a solution.
Rocket Lab's solution
By January 2025, Rocket Lab had a plan. It would send a rocket to Mars, drop a lander down to the surface, collect Perseverance's samples and pack them into another, smaller rocket, then shoot that rocket up to orbit, where the original rocket ship would take delivery and return the sample to Earth.
For $4 billion (half the cost of other companies' estimates), Rocket Lab would make MSR happen. By 2031, the samples could be back here on Earth if NASA acted quickly to approve its proposal.
Granted, NASA basically never acts quickly... but if it had done so, then MSR would add $4 billion to Rocket Lab's revenue stream. According to data from S&P Global Market Intelligence, that would have been about 9 times Rocket Lab's 2024 sales. Even spread over six years, it would grow annual revenue by more than 50%.
Rocket Lab CEO Peter Beck lobbied intensely and publicly for NASA to award him the contract, but it was not to be. One year after Rocket Lab made its proposal, Congress appears to have smothered MSR in its cradle. In one strikingly clear line of the House "minibus" appropriations bill, it state the situations clearly: "The agreement does not support the existing Mars Sample Return (MSR) program."
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What does this mean for Rocket Lab?
The loss of MSR and its potential $4 billion windfall comes as a heavy blow to Rocket Lab and its fans.
The roughly $666 million in annual revenue the contract would have provided would have been more money than this rocket stock made in all of last year. It would have covered 74% of the $900 million in revenue analysts forecast for Rocket Lab in 2026 as well.
No longer.
Granted, not all is lost for Rocket Lab. Even without MSR, the company is on course to finally turn profitable in 2027, according to Wall Street analyst estimates. Significantly higher revenue from the company's new Neutron reusable rocket (expected to make its first launch this year) should help with that, and help to grow earnings steadily thereafter. It's just that Rocket Lab would probably be even more profitable and win significant PR by getting to do MSR, too.
For investors, it's a disappointment, but not in and of itself a reason to sell Rocket Lab stock.
