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Portfolio Analysis: RocketLab

1/22/2026

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Disclaimer: Garrison Fathom's Sagacity Fund I and Garrison Fathom Fund I owns stakes in RocketLab. 
Our response to the latest news on RocketLab's update on their Neutron Test: 

We're honestly surprised they haven’t experienced a major setback since the early days of Electron.

Neutron is designed around cryogenic propellants—liquid oxygen and liquid methane—which are notoriously difficult to manage from a structural standpoint. A quick look at the tank design shows it is primarily composite, which brings with it a host of unique advantages and challenges.

Composite pressure vessels themselves are nothing new, and neither is this type of failure mode. Cryogenically induced structural failures have been a risk for decades. The difference here is visibility: Rocket Lab is a market darling, so every hiccup is amplified and dissected in public. Composites are finicky by nature—they don’t like to stretch, and they really don’t like to compress. When you fill a composite tank with cryogenic fluid, the structure wants to contract. When you then pressurize it to test levels, it wants to expand. The interfaces between the tank barrel and the end caps are especially critical and historically high-risk areas. Eventually, something gives, resulting in what the industry politely calls a “rapid disassembly.”

Importantly, these tests are intentionally brutal. Tanks are tested to what NASA calls ultimate design factor (and what the FAA refers to as ultimate load), typically 1.4x the maximum load the vehicle is ever expected to experience in flight. The philosophy is simple: if it survives this, it should survive anything operational.

Short version: you test far beyond real-world conditions so the real vehicle flies safely.

From that perspective, a failure during this phase is entirely normal—even with metallic tanks. Our co-founder and COO, Willie Costa, who is an aerospace engineer whose career spanned from Boeing to NASA, commented: 

Every rocket I’ve worked on, and every aircraft I’ve worked on, has experienced some form of structural failure during ground testing. They all ultimately flew safely. That’s the point of ground testing.

The encouraging part with composite pressure vessels is that—depending on the root cause and how the failure propagated (details we’re unlikely to see publicly, as they would expose proprietary aspects of the vehicle’s structural design)—the fix can be relatively straightforward. In many cases, it’s as “simple” as adding additional plies to the composite laminate. Yes, that adds mass, and yes, it may require some adjustments in how components are integrated or faired together. But this is vastly more straightforward and with potentially lower cost risk than the alternatives required for metallic tanks, which often involve new tooling, new forms, new presses, and lengthy re-qualification cycles.

If anything, I view this as good news. I’ll happily pay for a thousand failures on the ground to avoid dealing with a single failure in flight.


Net-net: nothing here changes our outlook. We remain optimistic about a Neutron maiden flight in 2026.

https://rocketlabcorp.com/launch/neutron/

https://ntrs.nasa.gov/api/citations/20090034483/downloads/20090034483.pdf
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