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SUMMARY
Parkev Tatevosian, CFA, examines Rocket Lab's recent performance and evaluates its investment prospects in light of the upcoming SpaceX IPO. The analysis covers Rocket Lab's financial progress, government contracts, revenue growth, and relative valuation compared to SpaceX.
MAIN POINTS
- Rocket Lab stock surged following the SpaceX IPO announcement and a strong earnings report.
- The company secured a $90 million US Space Force contract and filed for a $3 billion equity offering to support its capital needs.
- Rocket Lab has shown significant improvement in profitability ratios and rapid revenue growth over recent years.
- Analysts project Rocket Lab's revenue to quadruple between 2024 and 2028, with major defense contracts contributing to growth.
- The company's valuation has moderated after a recent industry setback, making it cheaper than the projected SpaceX IPO.
- Despite its improved outlook, Rocket Lab remains speculative, but may be preferable to SpaceX for investors seeking a pure play in the space sector.
DETAILED ANALYSIS
Rocket Lab has experienced a notable increase in investor interest, with its stock price rising over 76% year-to-date in 2026. This surge was driven by both the anticipation surrounding the SpaceX IPO, which is expected to debut at a nearly $2 trillion market capitalization, and Rocket Lab's own earnings report that exceeded expectations. The company's share price climbed from around $80 to $150 before retreating to approximately $124 following a Blue Origin rocket incident that dampened enthusiasm for the sector.
Recent developments include a $90 million contract with the US Space Force for geo satellites, which not only adds to Rocket Lab's revenue but also enhances its credibility in the industry. The company has also initiated a $3 billion equity offering to raise capital for its capital-intensive operations, acknowledging ongoing losses with an operating cash flow to sales ratio of -27.5% and an operating profit margin of -38%. However, these figures represent a marked improvement from previous lows, indicating progress toward profitability.
Revenue growth has been particularly strong, nearly doubling from $244 million in 2023 to $436 million in 2024, and then increasing by 50% to $602 million in 2025. Wall Street analysts forecast continued robust growth, projecting revenues to reach $1.6 billion by 2028. Rocket Lab also secured an $816 million missile defense satellite contract and completed the acquisition of Momentus Space Systems, expanding its technological capabilities.
In terms of valuation, Rocket Lab's forward price-to-sales ratio has decreased to 73, making it less expensive than the anticipated SpaceX IPO, which is estimated to have a ratio above 90. Unlike SpaceX, which will include other business segments such as XAI and Twitter, Rocket Lab offers a pure play on the space industry. Despite these positives, the investment remains speculative due to ongoing losses and the high-risk nature of the sector.
Nevertheless, for those seeking exposure to space stocks without the added complexity of diversified conglomerates, Rocket Lab may present a more attractive option than SpaceX at IPO.
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