RocketLab’s Neutron Update, On Holdings Earnings, and the eVTOL Rivalry Heats Up

In this episode of Motley Fool Hidden Gems Investing, Motley Fool contributors Tyler Crowe, Travis Hoium, and Matt Frankel discuss:

• RocketLab's earnings and the Neutron schedule.
• Investing opportunities in the space economy.
• On Holdings earnings.
• The give-and-take of DTC sales for retailers.
• eVTOL acquisitions.

To catch full episodes of all The Motley Fool's free podcasts, check out our podcast center. When you're ready to invest, check out this top 10 list of stocks to buy.

A full transcript is below.

This podcast was recorded on Aug. 12, 2026.

Tyler Crowe: Rocket Lab investors are still waiting on the pad. Motley Fool Hidden Gems Investing starts now. Welcome to Motley Fool Hidden Gems Investing. I'm your host, Tyler Crowe, and today I'm joined by longtime Fool contributors, Travis Hoium and Matt Frankel. A little bit of end-of-the-summer mix-up as everyone gets those last-minute vacations in before kids go back to school. Earnings are still coming in. We're starting to wind down in the earnings season, but we still got a couple coming online. We had On Holdings report. Going to talk about the state of the electric vertical takeoff and landing industry because there's been a lot of moves lately.

But we're going to start today with Rocket Lab earnings, which came in yesterday, but obviously didn't get a chance to talk about it yesterday. Shares of Rocket Lab are down a little bit, about 2%, as we’re taping after earnings. But let's be real. Earnings wasn't really the topic du jour. I went through the earnings call transcript, and the word neutron appeared in the conference call 61 times. Iridium, which is the acquisition it just made, came up 30 times, and only 17 times for electron, the rocket they’re actually used to generate those earnings. Guys, what did you see in the report, and what were some of your reactions?

Matt Frankel: I'm here because my kids started school today. I'll go ahead and say that. We start early in the South. Rocket Lab's numbers, like you said, this real story is not the current revenue and the current profitability, but let's start there. Rocket Lab's numbers were strong on the top line. Revenue was a little more than expected. The backlog grew a lot faster than expected, more than doubling year over year. The bottom line missed. It was a little bit of a wider loss than investors had expected. That matters because the company is not profitable yet. Investors are skeptical about their near-term path to profitability. This is a company that has a roughly $50 billion market cap. A larger-than-expected cash burn is justifiably a concern for investors, and that’s especially considering that the neutron, which you correctly mentioned, appeared 61 times in the conference call. It still hasn't gotten off the ground. Investors want to know that they're going to get the profitability without having to raise a ton more capital at this point.

Travis Hoium: I think this is a story that we've seen over and over again this earning season. What is expectations? Then what's reality? If you actually just take a step back and look at Rocket Lab, the stocks up 1,100% over the past three years. It's been a phenomenal run. Let's not take one day as too much of a positive or a negative, but Matt mentioned $50 billion market cap, $2.36 billion in backlog. That is a very small fraction of that market cap. Investors have very high expectations. Any blip in, you know what? We may be a little bit delayed has been just hammered by the market. I'm actually a little bit surprised that the market's not reacting a little bit more negatively, since this is such a long-term growth story. Anything that pushes that revenue out is going to be a negative, but they're really trying to convince investors the reason that they're talking about these next-generation products about their acquisition of Iridium is they're trying to solidify that business model and vertically integrate, show that they're going to be able to generate that value long term. They're still trying to convince investors, it's a little bit surprising that it's just a little bit of a ho-hum reaction from the market today.

Tyler Crowe: The Iridium deal is like what we can be investment that they're making. But at the same time, Iridium is a cash generative business. You can stem the cash burn that's been having for the rest of the business. You can use that to maybe sharp the balance sheet a little bit. It's not going to solve all those problems, but it's certainly going to be a nice salve for what we've seen so far. Let's broaden out the lens a little bit here because there are some key things that have been happening in the space industry. I'm not even mentioning SpaceX did an IPO, and everyone's been talking about SpaceX, but there's a lot of like trends to watch in space recently, and it's part of the reason why people are so excited about investing in space. We've got the golden dome, this major defense space investment priority at the Pentagon. We’ve got a new International Space Station, and then just a lot of commercial interests going on. With all of this in mind, and yes, the space industry is combed over in terms of investment at this point, but where do you see some of the compelling investment opportunities in this particular space?

Travis Hoium: I don't know that anything is necessarily compelling to me right now from a valuation perspective, but I do definitely want to watch what's the reality for these companies? If you look at a company like an AST Space Mobile, a lot of hype behind that business. Are people actually going to sign up for a satellite connection for their phone? Is that going to be included in your plan if you're on Verizon or AT&T? What's the real business model behind it? Because we're currently in this phase of, hey, more rockets going up, more payload, more revenue for these rocket companies. All of this is great. We're not at the there there yet point, but we're getting really close where these companies are going to have to start showing revenue, margin, whether they have pricing power or not. That's what I'm keeping an eye on. I don't have many or any investments in this space at this point, but I'm intrigued by the potential for growth. I just think we may be set for a pullback when we get to that reality point.

Matt Frankel: I agree with Travis that the valuations pretty much anywhere in the space economy aren't terribly attractive right now. There are some long-term trends that I think have a lot of potential. It sounded ridiculous when I first started, I have to admit, but the data centers and space thing sounds pretty cool. Like it could really be a solution to a lot of the problems that we're going to face. But of the things you mentioned, I'd say that Golden Dome is really the most investible on a near-term basis, at least in my mind.

Now, call it a defense play, call it a space play, call it what you will. Depending on the scope and the timeline, estimates have ranged from anywhere 175 billion to 1.2 trillion in total spending. Unlike a lot of the other things we're talking about, there are already real contracts being awarded, real money changing hands. It's a theme that has money moving now, and there are some real legitimate cash-flowing businesses that have a big piece of it.

Tyler Crowe: I can't help it, but whenever I hear data centers in space, this is not for anything investment related, but every single time I hear it, I just hear like that Muppet Show “Pigs in Space” thing, and it's like that big cry at the end. Hopefully, I know it dates me incredibly as an old person, talking about the 1970s Muppet Show, but I don't know why, just etched in my brain. Coming up after the break, we're going to come back down to earth a little bit. We're going to take a look at On Holdings earnings.

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Tyler Crowe: Shares of a shoe retailer, I'll call it athletic athletire apparel footwear company. On Holding. Their shares are down to about 18.8% after the company reported earnings earlier this morning. 18% sounds awful, but it seems like this quarter, that's what everything happens these days when we report earnings. Either everything jumps 20% or down 15%. Then three days later, we're just right back where we were. We'll see if that happens here, but Travis, I know you followed this company a lot, give me the rundown. What did you see? Maybe the 18% is just another blip or was there actually something that might justify why the market is thinking this?

Travis Hoium: The justification in Lee's short term is that their guidance was relatively weak. If we look at the results on always reports in Swiss francs, which makes their results really confusing for investors because you look at revenue was up 13.5% in the quarter. That doesn't sound all that impressive, but on a constant currency basis, it was actually 21.6%. It's always important to look at those constant currency numbers because most of their sales are in the U.S., so a weak dollar is going to make those sales look smaller when you look through the lens of a Swiss franc.

But what investors are really focused on right now is that their guidance for the rest of the year was down a little bit. They're expecting growth in the low 20% range instead of, I believe it was 23% plus that they said last quarter, that's telling you that maybe the consumer is a little bit weaker, maybe they're losing a little bit of market share if we're having some recovery with Nike. I don't think we're seeing that the interesting thing for On is that they have made explicit decision to keep their pricing power. Their margins are phenomenal. They're expecting a gross profit margin to be at least 65%. That is just crazy in apparel business. They're saying, you know what, we're going to focus on this profitability. We're going to give up growth as a result.

The market’s reaction negatively to that today, but you could look back at the last five years or so with Nike, the last five years at Lululemon and see that, you know what, it's a slippery slope going down. I'm going to start discounting my products, give people a little bit better price to sales to move volume, to increase that sales number. On says that they don't want to do that. Strategically, I think that's probably a good move long term, but it also means if your growth is a little bit slower, those growth investors are going to be disappointed, even if the profitability is going to be a little bit better than maybe we thought it was when the company was growing faster. A lot of trade-offs that they're making, what we don't know, like I said, based on some of those competitors, how many of those are macro trade-offs and how many of those are On specific.

Matt Frankel: As Travis said, the time that On beat on earnings, they missed on revenue. Sales were somewhat disappointing, especially on the wholesale side, which they framed as they did that on purpose, and maybe they did. But margins expanded more than expected. Their gross margin, their adjusted EBITDA margin were both pretty impressive compared to a year ago. The big geographical disparity in the results, the Asia Pacific sales grew 55%. All of this is in constant currency, by the way, to not confuse anybody. In the Americas, it was 13% in constant currency. Big sales disparity. America's it's still their core market, but you're really seeing a slowdown in the strange consumer in America and things like that. The real reason for the decline, as he mentioned, was the guidance, a guidance reduction. At the same time, a company reports a big revenue miss, it causes investors to take a step back and consider whether this growth story, which admittedly has been stellar for years, could be slowing down a little quicker than expected.

Tyler Crowe: One of the things that stood out to me, Travis, you were talking about gross margins and being so strong. I think part of the reason they do that is that On, one of their strengths is direct-to-consumer channel sales, their own website, not necessarily doing things wholesales at like at Dick's Sporting Goods, nearly as much relative to a lot of the other companies. It mentioned DTC sales were up more than its overall growth numbers, which does tend to explain a little bit on that higher margins because that tends to be a higher margin sale. What I find interesting about this point is comparing it to Nike and Adidas and companies like that, where the other larger companies, which haven't been as successful with DTC channels relative to them. They're still trying to work really hard with the Dick's Sporting Goods, the Foot Lockers. The companies that you end up doing a wholesale. It's larger volume, but much lower margin.

My question is whether, like, DTC sales, is this just how new companies that grow up in the age of the Internet and the age of DTC? Is this just how it's going to be? Or can On actually get to the scale of a Nike or Adidas relying heavily on this DTC model? Or is there going to be some point where that channel starts to limit growth, and we'll have to push into those other channels more?

Travis Hoium: They're definitely not going to reach the scale of Nike. I think were all similar ages growing up in the late '80s into the '90s. Nike was everywhere, and the model there has just completely shifted because you're going from a supply-driven environment where the supply is the power, having Jordan as a sponsorship, having TV commercials, all that stuff, everybody was wearing Nike. Now you're in much more of a case where there can be individualized ads with those direct-to-consumer sales on Instagram or on Google, where Matt's going to see a different ad from me, and we're going to maybe buy different products as a result. I think there is going to be more of a disparate market.

The question for these companies is going to be, where do you fit in that market, and what is your scale going to be? You're right that On maybe reaching a point where this isn't going to be a 30% compounding company anymore, but if they can compound their revenue growth at 15-20% and do so at a really high margin, that can still be really phenomenal business. I think when you're looking at On Holdings, when you're looking at Nike or Lululemon, the question you have to ask yourself is what are they going to be and what are they showing themselves to be? On showed you this quarter, hey, all that talk that we had about pricing power, about keeping margins high, that's exactly what we're doing. What we're doing is we're giving up sales as a result, but that means that in five years, this is still going to be a premium brand.

They're not going to go down that slippery slope of Under Armour, for example, which has been disastrous for investors. When you get to that DTC world, you've got to look at, yes, the pie is smaller for an On Holdings to reach. But as long as you're reaching the customers at a very profitable level, that can still be a really phenomenal business. It's a little bit of both, and I don't necessarily think that that means that they're going to give up sales or give up margin long term. It's just a very different business than you had in the '80s and '90s when a lot of these other companies were growing up.

Matt Frankel: Speaking of these companies growing up, like the three of us, Nike came up in a different era. The tools to grow direct-to-consumer relationships didn't exist yet. I don't remember anyone being on the Internet back in the late '80s. It was a thing, but it wasn't commercialized yet.

Travis Hoium: There weren't Nike ads on Prodigy back then.

Matt Frankel: The TV didn't show you a targeted ad. It didn't exist yet. Direct to Consumer was the JCPenney catalog at the time. That was the closest thing we had to direct-to-consumer tools. Its identity was formed completely on its wholesale relationships. Companies these days have more control. Direct consumer gives a company more control over pricing over margins. That's why we mentioned that On Holding is somewhat engineering its margins right now, deliberately by pumping the brakes on wholesale. It can control its brand image better. That's how you maintain that premium brand that On is doing.

But I will say that a little more than Travis, I feel like the direct consumer model is going to have more limits at scale when it comes to building out your own stores, building out your fulfillment logistics, especially things like that. It's going to come to a point where On Holding is going to have to make a choice. Become a value stock that's growing at 10-15% annually, which it's approaching value stock territory right now, if I'm being totally honest. Or maintain a 30% plus growth rate but really lean into wholesale and give up a lot of your margins. They're going to have to compromise a little bit within at some point, and I'm not sure what direction they're going to go. So far, I can't argue with anything they've done strategically, so I have no doubt that they're going to make the right call. But it's going to be more of a balancing act, I think, over the next five years.

Tyler Crowe: The holding the price thing always works out until all of a sudden, there's a lot of inventory building up on the balance sheet, and then you start to see a little bit more of that wholesale moving stuff maybe in channels that they don't expect. It seems as long as On can keep that inventory supply chain working efficiently and not having a lot of stuff build up on the balance sheet should work. Before we go, Travis, I know you're a fan of the company, also a fan of the shoes. What's the most recent On purchase you've had?

Travis Hoium: I've got these new slip-on shoes where the back folds down a little bit like I don't know if you would like a kiss an example. It's like a Croc if you want it to be, or a shoe if you want it to be. They're a little goofy, but I don't know. I'm liking them so far.

Matt Frankel: Did you buy them wholesale or direct-to-consumer?

Travis Hoium: Direct to consumer. Absolutely.

Tyler Crowe: There you go. Coming up out of the break, we're going to look at the moving and shaking in the eVTOL industry.

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Tyler Crowe: It's been a minute since the last time we had two companies persistently engaged in a game of anything you can do, I can do better than electric vertical takeoff and landing companies, like Archer Aviation and Joby Aviation. That's not even counting, like the numerous times. Both have dragged each other into the court for various reasons, one suing the other for patent, whatever, stealing stuff. It's been quite a dramatic past couple of years or two. Now, it's only Tuesday, but we've already seen both companies announce significant acquisitions. Again, one does one thing, the other's got to react. Archer announced a deal with Boeing to take over its eVTOL and several of its other non-core Boeing properties. Then, less than 24 hours later, Joby announced it's acquiring a defense contractor Resonant Sciences. Guys, I ask you guys to each, pick one of the deals and give us a quick rundown in the reactions that you guys saw for each of the deals.

Matt Frankel: Archer's deal, the market really liked it, it seems like. The stock was up roughly 20% afterwards, that you mentioned, they're acquiring three Boeing subsidiaries. There's the eVTOL developer. There's one company that makes air traffic management software, one that makes defense drones, that's actually a very profitable business already. It's an all-stock deal, so this didn't cost them any money. Gives Boeing a stake of nearly 20% in Archer, including some warrants that it's getting. From a strategic standpoint, it makes a lot of sense for both companies. I mentioned one of the acquired properties called Institute. It's the drone maker. They're already profitable. They have over $200 million of annual revenue. Archer is mostly a pre-revenue company, other than some grants and research funding and things like that.

This is a big deal when it comes to, I don't want to even say revenue diversification, but just having some. It also gets a fully autonomous eVTOL design that it didn't have to design itself. That was designed by Boeing, which you can't really get mad at that. From Boeing's perspective, it gets rid of a lot of some of its non-core properties that it was still holding and can focus more of its efforts on its core aircraft business, commercial and military. It gets a long-term upside from the Archer stake if these businesses turn out to be something. It's getting rid of these businesses but still getting financial benefit from them. Investors seem to like the deal. It makes Archer a much more credible defense sector player. Like I said, it adds some real revenue to a balance sheet that really needs it.

Travis Hoium: The reaction to Archer’s was positive, and that's generally been the case when Archer makes these press releases, and they're really good at the press release game. But you look at since the beginning of 2025, Joby Aviation has outperformed Archer, and the reason for I think was Joby was the more focused company. We knew what they were going to be doing. They were going to be flying their aircraft with commercial passengers before Archer, potentially more than a year before Archer Aviation. This was really a company that was scaling in the vertical takeoff and landing with air taxis. Building out, they bought a company called Blade last year. Blade's currently running helicopters. We could just imagine just fitting in an eVTOL aircraft and then taking that from LaGuardia to Manhattan, for example.

The interesting thing with this deal is this $500 million acquisition, so it was a much smaller acquistion, $450 million of it in cash, only 50 million in stock. But it does move Joby more into the defense space. What they said in the release is that this is actually going to become their new defense business. We'll have two separate divisions because I think that they're worried about exactly what I said earlier. Hey, you're not a focused company anymore. We thought you were an air taxi company, and now you're a defense contractor. I think the idea here is just like with Archer's acquisition, you are bringing in $100 million worth of revenue. It is a growth company. It can operate on its own and yet still have a little bit of optionality on the defense side.

But for Joby, I think the bigger question to me is, what does this company want to be long term? If the answer is you want to be a big air taxi company, then just focus on that. Don't take that $450 million and put it into a defense contractor. Put it into scaling out your business and becoming their taxi company. But the market's reaction, ironically loved Archer yesterday. Pretty ho-hum on this Joby deal today. Stocks down about 3%.

Tyler Crowe: Two quick notes and things that I noticed with both of these deals for one. Boeing sold them an autonomous eVTOL design but kept the autonomous software for themselves. Interesting little fold in that development. Also, in the Joby press release, I was very surprised how much they were talking about acquiring one-million-square-foot manufacturing space, almost as a little bit of, we bought a defense business, but look at all this manufacturing space we have now, so we can start to scale up. Maybe that was just to your point, trying to stay focused and saying that's what we got, but we'll see. Here is my takeaway from both of these announcements. It appears to be a deliberate move to diversify the holdings. Is this an admission that this eVTOL deployment, commercial air taxi business is much harder than initially expected and will likely take a lot longer?

Matt Frankel: I would call it more hedging against the possibility that eVTOLs could take longer than originally thought, not necessarily an admission that they will. Both say that they're still on track to reach some key milestones they set this year, but it's true that anytime you're building a new category a vehicle that flies. Look at Rocket Lab. It's a perfect example. It generally has taken longer and cost more money than originally expected. It makes sense that investors are somewhat getting impatient with these essentially being pre-revenue businesses. But I think they're still on track to deliver the product that they promised just maybe a year or three later than they originally thought.

Travis Hoium: I actually think that this shows that they are trying to diversify business and not scaling that core business as quickly as they potentially could. That's where I have a lot more questions than answers, especially on the Joby side, because Joby actually wants to have potentially commercial passengers in 2026. They're potentially going to be operating in Texas in 2026, definitely in 2027. They do not have enough capacity to actually scale that operation today. I don't know where defense fits into that. You could read into both of these deals, I think, and say that the bigger piece of it is actually autonomy, and they're looking at five or 10 years down the road and going, you know what? We don't even want to have a pilot in these aircraft. We wanted to fly fully autonomously. We need to build these software pieces by the sensors. That's part of the Joby deal. But I think there's a lot to play out here. We'll get a little bit more information from both. Joby has a presentation for investors after the market closes today. But I think this just does add a lot more questions because they're trying to be both commercial companies and defense contractors, and it's really hard to do both when you don't have either completed at this.

Tyler Crowe: It's definitely a wait-and-see sort of approach. I can see the logic on wanting to get into defense business. It's steady. It's cash generative. You can use that to fund some of this stuff and maybe give yourself a lifeline and not have to go to the capital markets after issuing a slew of press releases, just to pump your stock up enough to make it worthwhile. We'll see. Again, the thing that scared me the most is when Matt said a year or three. I don't think a lot of investors would be too excited when they hear, we're three years behind. I think one year, maybe. That's all the time we have for day. I'm going to have disclosure for down here.

As always, people on the program may have interest in the stocks and The Motley Fool may have formal recommendations or against, so don't buy stocks to be solely here. All personal finance content follows Motley Fool editorial standards, and it's not approved by advertisers. Advertisements or sponsored content by informational purposes only. To see our full advertising exposure, please check out our show notes. Thanks to producer Kristi Waterworth and the rest of The Motley Fool team. For Matt Travis and myself, thanks for listening. We'll chat again soon.

Matt Frankel, CFP® has no position in any of the stocks mentioned. Travis Hoium has positions in Alphabet, Crocs, Joby Aviation, On Holding, and Verizon Communications and has the following options: long December 2027 $20 puts on AST SpaceMobile. Tyler Crowe has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends AST SpaceMobile, Alphabet, Boeing, Nike, On Holding, and Rocket Lab. The Motley Fool recommends Crocs, Lululemon Athletica Inc., Under Armour, and Verizon Communications. The Motley Fool has a disclosure policy.