Rocket Lab Corporation

Below is Validea's guru fundamental report for ROCKET LAB USA INC (RKLB). Of the 22 guru strategies we follow, RKLB rates highest using our Quantitative Momentum Investor model based on the published strategy of Wesley Gray. This momentum model looks for stocks with strong and consistent intermediate-term relative performance.
ROCKET LAB USA INC (RKLB) is a large-cap value stock in the Aerospace & Defense industry. The rating using this strategy is 83% based on the firm’s underlying fundamentals and the stock’s valuation. A score of 80% or above typically indicates that the strategy has some interest in the stock and a score above 90% typically indicates strong interest.
The following table summarizes whether the stock meets each of this strategy's tests. Not all criteria in the below table receive equal weighting or are independent, but the table provides a brief overview of the strong and weak points of the security in the context of the strategy's criteria.
Detailed Analysis of ROCKET LAB USA INC
More Information on Wesley Gray
About Wesley Gray: Wesley Gray is the founder of Alpha Architect and the author (along with co-author Jack Vogel) of "Quantitative Momentum A Practitioner's Guide to Building a Momentum-Based Stock Selection System". He is also the author (along with co-author Tobias Carlisle) of "Quantitative Value: A Practitioner's Guide to Automating Intelligent Investment and Eliminating Behavioral Errors". He is an industry recognized expert in the application of quantitative investing strategies. Wes is also a former Marine and has his Phd from the Univerisity of Chicago, where he studied under Nobel Prize winner Eugene Fama.
Additional Research Links
About Validea: Validea is aninvestment researchservice that follows the published strategies of investment legends. Validea offers both stock analysis and model portfolios based on gurus who have outperformed the market over the long-term, including Warren Buffett, Benjamin Graham, Peter Lynch and Martin Zweig. For more information about Validea, click here
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Validea Detailed Fundamental Analysis - RKLB

Rocket Lab USA, Inc. (RKLB) is making strong progress in the space services sector through a contract signing with Bollinger Shipyards (announced last week) to build an ocean landing platform for its upcoming Neutron reusable rocket. The 400-foot vessel, named Return On Investment, will be fitted with Rocket Lab’s technology, including systems to support rocket landings at sea. The platform is expected to be delivered in early 2026.
With 68 successful Electron missions and strong partnerships with NASA and the U.S. government, Rocket Lab is already enjoying a strong prominence in the small satellite launch market. With the Neutron project, the company plans to serve larger payload missions and thereby grow its services beyond small satellite launches.
As global demand for satellite services and national security solutions increases, investor interest in the space technology sector is on the rise. Against this backdrop, the latest contract signing news may lead space-focused investors to consider buying RKLB. However, before making a decision, let’s take a look at the stock’s performance, growth opportunities, valuation, and potential risks to make a more informed decision.
RKLB Stock’s Performance
RKLB’s shares have surged a solid 582.4% in the past year, outperforming the Zacks Aerospace-Defense-Equipment industry’s growth of 46.2% and the broader Zacks Aerospace sector’s return of 27.1%. It has also surpassed the S&P 500’s return of 11% in the same time frame.
Image Source: Zacks Investment Research
A similar stellar performance has been delivered by other defense stocks involved in the space industry, such as The Boeing Company (BA) and Intuitive Machines (LUNR), over the past year. Shares of LUNR have surged 150.8%, while BA shares have risen 26.7%.
Tailwinds Set to Drive Rocket Lab
Rocket Lab continues to build growth momentum through successful missions, strong partnerships and new product development. In June 2025, the company launched its 68th Electron rocket for a confidential commercial customer. This represented the 10th Electron mission, with 100% mission success so far this year.
These frequent launches should support Rocket Lab’s goal of completing more than 20 Electron missions this year, reflecting strong demand for its services and building trust among commercial and government clients. This, in turn, might attract more customers to select RKLB for their satellite launches and thereby boost the company’s revenue growth in future quarters.
Additionally, Rocket Lab is preparing for the first launch of its Neutron rocket, expected in the second half of 2025, to which the recent contract to build an ocean landing platform will play the role of a major catalyst. This should help Rocket Lab expand beyond small satellite launches and compete with larger players in the space industry.
Let’s take a look at RKLB’s near-term estimates to check if that reflects solid growth prospects.
Estimates for RKLB Stock
The Zacks Consensus Estimate for RKLB’s 2025 and 2026 sales suggests an improvement of 32.8% and 47.7%, respectively, year over year. A look at its 2025 and 2026 earnings estimates suggests a similar year-over-year improvement.
Image Source: Zacks Investment Research
The upward revision of its 2025 estimates over the past 60 days indicates investors’ increasing confidence in the stock’s earnings generation capabilities. However, its 2026 estimates have moved south over the past 60 days.
Image Source: Zacks Investment Research
Risks to Consider Before Choosing RKLB
Rocket Lab offers strong near-term growth prospects, but there are a few important risks investors should be aware of. One key concern is the company’s high operating costs, driven by continuous investments in advanced technologies like the Neutron rocket, satellite platforms, and various space components. These expenses often outweigh revenue growth, resulting in ongoing losses, as reflected in recent quarterly results.
Another challenge is Rocket Lab’s higher debt levels compared to its industry peers, as is evident from the below provided long-term debt-to-capital ratio of the stock. As the company continues to actively invest in the development and commercialization of new space systems, which are highly capital-intensive, its higher debt burden, which might cause financial risk during economic downturns, remains a concern. RKLB’s current long-term debt-to-capital ratio is pinned at 49.25 compared with the industry’s average of 46.51.
RKLB Stock Trading at a Premium
In terms of valuation, RKLB’s forward 12-month price-to-sales (P/S) is 24.36X, a premium to its peer group’s average of 9.88X. This suggests that investors will be paying a higher price than the company's expected sales growth compared to that of its industry.
Image Source: Zacks Investment Research
Other space stocks, such as LUNR and BA, are trading at a discount to RKLB in terms of their forward P/S ratio. LUNR and BA have a forward sales multiple of 5.79X and 1.87X, respectively.
Should You Buy RKLB Stock Now?
To conclude, despite its recent outperformance at the bourses and upbeat sales estimate, RKLB’s premium valuation and high leverage raise red flags. Given these concerns, it may be prudent for investors to wait for clearer signs of stability, in terms of leverage, before making a decision.
The stock’s Zacks Rank #4 (Sell) further supports our thesis.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

RKLB Boosts Neutron Plan With Ship Deal: How to Play the Stock

Below is Validea's guru fundamental report for ROCKET LAB USA INC (RKLB). Of the 22 guru strategies we follow, RKLB rates highest using our Quantitative Momentum Investor model based on the published strategy of Wesley Gray. This momentum model looks for stocks with strong and consistent intermediate-term relative performance.
ROCKET LAB USA INC (RKLB) is a large-cap value stock in the Aerospace & Defense industry. The rating using this strategy is 88% based on the firm’s underlying fundamentals and the stock’s valuation. A score of 80% or above typically indicates that the strategy has some interest in the stock and a score above 90% typically indicates strong interest.
The following table summarizes whether the stock meets each of this strategy's tests. Not all criteria in the below table receive equal weighting or are independent, but the table provides a brief overview of the strong and weak points of the security in the context of the strategy's criteria.
Detailed Analysis of ROCKET LAB USA INC
More Information on Wesley Gray
About Wesley Gray: Wesley Gray is the founder of Alpha Architect and the author (along with co-author Jack Vogel) of "Quantitative Momentum A Practitioner's Guide to Building a Momentum-Based Stock Selection System". He is also the author (along with co-author Tobias Carlisle) of "Quantitative Value: A Practitioner's Guide to Automating Intelligent Investment and Eliminating Behavioral Errors". He is an industry recognized expert in the application of quantitative investing strategies. Wes is also a former Marine and has his Phd from the Univerisity of Chicago, where he studied under Nobel Prize winner Eugene Fama.
Additional Research Links
About Validea: Validea is aninvestment researchservice that follows the published strategies of investment legends. Validea offers both stock analysis and model portfolios based on gurus who have outperformed the market over the long-term, including Warren Buffett, Benjamin Graham, Peter Lynch and Martin Zweig. For more information about Validea, click here
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Key Points
Rocket Lab stock is surging because of its growth in the space economy.
It is working on a new rocket system called the Neutron.
Shares look overvalued right now.
Shares of space flight company Rocket Lab (NASDAQ: RKLB) soared 40.4% in the first half of 2025, according to data from S&P Global Market Intelligence. A fast-growing company in the exciting space economy, Rocket Lab is up close to 600% in the last year and is inching its way closer to competing with SpaceX, which now has a reported valuation of $400 billion.
There is a ton of excitement around Rocket Lab and the space economy today. Here's why the stock surged in the first half of 2025.
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The next SpaceX?
Rocket Lab is aiming to build the next vertically integrated space flight company based in the United States. It began with its small Electron rocket, which has now completed 68 missions and has a large backlog from customers. The launch vehicle is the only other consistent commercial launcher, outside of SpaceX, carrying payloads for third-party customers.
On top of launching, Rocket Lab has built and acquired capabilities to sell space systems to customers, which include things like satellites, communication systems, and solar arrays. This has been a huge boon to the company, leading to the division now accounting for the majority of its overall sales.
Lastly, Rocket Lab is working on a larger rocket system called the Neutron, which is going to compete with SpaceX more directly. Testing of the Neutron will begin shortly, with the full-fledged reusable system expected to be ready within the next year or two. If the Neutron is successful, Rocket Lab could see a step change in growth in the coming years.
Revenue was $122.5 million last quarter, up 32% year over year, and is up an astonishing 734% in the last five years. Seeing this growth, investors are extremely optimistic about Rocket Lab's future.
Should you buy Rocket Lab stock?
Today, after Rocket Lab's surge, the stock is at a market cap of $18 billion. Revenue was just $466 million over the last 12 months.
Sales should continue to grow quickly, but this is an extreme valuation. The stock has a price-to-sales ratio (P/S) of 42, which is unsustainable. Investors are placing huge forward expectations on Rocket Lab after seeing the stock rise 600%, which should make any investor looking to buy right now nervous. Even if the company eventually reaches billions of dollars in annual sales, the stock will likely not perform well for shareholders going forward. Avoid buying Rocket Lab stock in your portfolio today.
Should you invest $1,000 in Rocket Lab right now?
Before you buy stock in Rocket Lab, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Rocket Lab wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $671,477!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,010,880!*
Now, it’s worth noting Stock Advisor’s total average return is 1,047% — a market-crushing outperformance compared to 180% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.
*Stock Advisor returns as of July 7, 2025
Brett Schafer has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Rocket Lab. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Why Rocket Lab Stock Surged 40% in the First Half of 2025

Is the shine coming off of Apple stock? It's a question I've been asking for years, and, so far this year, Apple is leaving investors disappointed. Its shares have fallen by nearly 20%. That makes it one of the two worst-performing stocks -- along with Tesla -- among the "Magnificent Seven" (Apple, Alphabet, Amazon, Microsoft, Nvidia, Meta Platforms, and Tesla).
So, has the time come for investors to shunt Apple to the side in favor of some new stocks? I think so, and here are two companies I would consider.
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MercadoLibre
What's appealing about MercadoLibre is its solid financial performance and the secular tailwinds that could power its growth for years.
MercadoLibre operates the largest e-commerce network in Latin America and has generated $22.4 billion in revenue over the last 12 months. Overall revenue increased at a blistering 37% in its most recent quarter (for the three months ending on March 31, 2025), while net income surged by 44%. Gross merchandise value (GMV) increased 17% overall, while GMV in Argentina alone skyrocketed by 126%.
In addition to its strong e-commerce results, the company's fintech arm, Mercado Pago, continues to grow rapidly. Monthly active users (MAUs) hit 64 million, an increase of 31% from the same quarter last year, showing that the company is rapidly scaling this lucrative business that provides financing options for customers.
Finally, it is important to note that e-commerce in Latin America remains in its early stages, as much of the region is still building out the infrastructure needed to support an e-commerce economy. MercadoLibre is at the forefront, and is rapidly expanding its logistics network to lower its fulfillment costs and expand free shipping wherever possible.
All this said, MercadoLibre stock does carry some risk. Most notably, Latin American economies tend to be volatile. Any economic downturn could quickly cut into MercadoLibre's rapid growth.
Therefore, investors should exercise caution. While MercadoLibre's long-term prospects remain bright, one should be prepared for volatility in the short term.
Rocket Lab USA
The company provides small satellite launches using reusable rockets, a similar business model to one of its chief competitors, SpaceX -- although on a much smaller scale. Last year, Rocket Lab launched 16 missions, while SpaceX launched 138.
Nevertheless, there is a growing demand for space launches due to the ever-increasing amount of space-based infrastructure. Consider all the familiar tools that rely on space equipment: meteorological satellites, navigational aides, mapping and reconnaissance equipment, and communication links. As the demand for these tools increases down on Earth, there is a need to deploy more -- and improved -- equipment in space.
Furthermore, there is also a pressing need for military and intelligence equipment in space. As such, Rocket Lab has partnered with the U.S. Department of Defense, Space Force, and various defense contractors.
Turning to the company's stock, Rocket Lab's performance has been excellent. Its stock has advanced by nearly 600% over the last 12 months. The main driver has been its strong revenue growth. Trailing-12-month revenue has increased from $327 million to $466 million, an increase of 43%.
However, the company's lack of profits and negative free cash flow will rule this stock out for some investors. In addition, while the space economy is a new field, it doesn't lack competition. Specifically, SpaceX and Blue Origin -- backed by their deep-pocketed founders of Elon Musk and Jeff Bezos, respectively -- are fierce challengers in this sector.
Notwithstanding these risks, Rocket Lab does present an opportunity for investors who are bullish on the space economy. There will be no shortage of demand for space launches going forward, and if Rocket Lab can continue to deliver successful missions, the company's key metrics -- and stock price -- should continue to soar as well.
Should you invest $1,000 in Rocket Lab right now?
Before you buy stock in Rocket Lab, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Rocket Lab wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $722,181!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $968,402!*
Now, it’s worth noting Stock Advisor’s total average return is 1,069% — a market-crushing outperformance compared to 177% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.
*Stock Advisor returns as of June 30, 2025
Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Jake Lerch has positions in Alphabet, Amazon, MercadoLibre, Nvidia, Rocket Lab, and Tesla and has the following options: long July 2025 $425 puts on Microsoft. The Motley Fool has positions in and recommends Alphabet, Amazon, Apple, MercadoLibre, Meta Platforms, Microsoft, Nvidia, Rocket Lab, and Tesla. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Should You Forget Apple and Buy These 2 Millionaire-Maker Stocks Instead?

Rocket Lab USA (NASDAQ: RKLB) is emerging as a compelling under-the-radar play in the modern space race. SpaceX dominates headlines, but investors still cannot buy stock in the leading launch company in public markets.
Rocket Lab has carved out a spot as the second-most utilized launch provider in the U.S., specializing in small satellite launches with its Electron rocket. The company is pushing forward with its larger Neutron rocket, expected to launch this year, as it looks to capture a bigger slice of what McKinsey projects could be a $1.8 trillion space economy by 2035.
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Rocket Lab offers high growth potential as it expands into a full-blown space-services business. Here's what investors have to look forward to from Rocket Lab during the next five years.
Its Neutron rocket could be a game changer
Rocket Lab USA is entering a critical phase as it seeks to establish a foothold in the space economy, providing space-launch services and satellite systems. One significant contributor to its future success will be the development and launch of the Neutron rocket. This medium-lift launch vehicle is designed to support larger missions, which will not only allow Rocket Lab to accommodate bigger payloads but also increase profitability and margins per launch.
Currently, Rocket Lab's Electron rocket is limited by its smaller size and capacity for lighter payloads, which restrict the company's ability to secure contracts for larger projects. The Neutron rocket is designed to carry payloads of up to 13,000 kilograms -- a 60-fold increase compared to the Electron rocket. With this enhanced capability, Rocket Lab can better compete with SpaceX, which dominates the U.S. launch market.
Rocket Lab plans to launch the Neutron rocket in the second half of this year. However, some analysts express skepticism about this timeline. For instance, Bleecker Street Research, an investment firm that is short Rocket Lab stock, believes it may not be until mid-2026 or even 2027 until the Neutron rocket takes off. A delay in the launch would likely weigh on the stock in the near term, which is what Bleecker Street is counting on. That said, management still believes the rocket's debut is on track for the second half of this year.
Rocket Lab's goal to pursue "every part of the space value chain"
Rocket Lab's Electron rocket will continue to play a crucial role in deploying satellite constellations, with six missions planned for Japanese satellite maker iQPS in 2025 and an additional two missions scheduled for next year. Additionally, Rocket Lab aims to launch eight Gen-3 satellites for BlackSky by 2026.
Launches are one part of the puzzle. Rocket Lab's grander vision is to be a comprehensive end-to-end space-services provider. This will help position it as a leading prime contractor in the space industry, with a strong emphasis on developing satellite constellations.
One key move to further this was its acquisition of Mynaric AG, a company specializing in laser optical communications terminals. This acquisition enables Rocket Lab to scale up production of critical components for satellite-to-satellite connectivity. Mynaric is already a subcontractor for Rocket Lab on high-value contracts, such as the $515 million prime contract with the Space Development Agency (SDA).
Rocket Lab is expected to finalize its acquisition of Geost in the latter half of 2025, pending regulatory approval. This acquisition will bolster Rocket Lab's integrated capabilities in launch services, spacecraft, and payload delivery, establishing the company as a competitive force in U.S. national security missions. The acquisitions are part of the company's broader plan to pursue "every part of the space value chain," according to Chief Executive Officer Peter Beck.
What's next for Rocket Lab
As of March 31, Rocket Lab had a backlog of $1.07 billion. This represents the estimated value of work to be performed, and 56% of this backlog is expected to be recognized as revenue during the next 12 months, with the remainder expected to be recognized the next year. To put the size of this backlog into perspective, Rocket Lab's revenue last year was $436 million.
Looking further down the road, its Neutron rocket has been selected for onboarding to the U.S. Space Force's National Security Space Launch (NSSL) Phase 3 Lane 1 program. This is a multi-award, firm-fixed-price, indefinite-delivery/indefinite-quantity (IDIQ) contract worth as much as $5.6 billion, with an ordering period extending through June 2029 and the potential for an additional five-year ordering period through 2034.
Is Rocket Lab USA right for you?
The next five years are crucial for Rocket Lab, as it will launch its medium-lift rocket, continue to deliver satellite launches, and expand its space-systems business. That said, achieving and sustaining profitability and positive free cash flow remains a challenge in the near term, given its ongoing investments in testing and getting its Neutron rocket ready for prime time.
There is some risk to the stock, especially at today's valuation with a price-to-sales (P/S) ratio of 38 and a forward P/S ratio of 28.5. The stock is far from cheap and reflects high investor optimism around the company and its longer-term growth prospects. Analysts project that Rocket Lab may not be profitable until 2027.
Given this backdrop, Rocket Lab is vulnerable to large price swings, especially if the timeline around its Neutron launch doesn't unfold as planned. For this reason, Rocket Lab is a growth stock best suited for aggressive investors looking to bet on the growing space economy with a long-term outlook in mind.
Should you invest $1,000 in Rocket Lab right now?
Before you buy stock in Rocket Lab, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Rocket Lab wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $713,547!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $966,931!*
Now, it’s worth noting Stock Advisor’s total average return is 1,062% — a market-crushing outperformance compared to 177% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.
*Stock Advisor returns as of June 30, 2025
Courtney Carlsen has positions in Rocket Lab. The Motley Fool has positions in and recommends Rocket Lab. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Where Will Rocket Lab USA Be in 5 Years?

Looking today at week-over-week shares outstanding changes among the universe of ETFs covered at ETF Channel, one standout is the SPDR S&P Aerospace & Defense ETF (Symbol: XAR) where we have detected an approximate $168.1 million dollar outflow -- that's a 11.5% decrease week over week (from 14,300,000 to 12,650,000). Among the largest underlying components of XAR, in trading today Aerojet Rocketdyne Holdings Inc (Symbol: AJRD) is up about 2.3%, Huntington Ingalls Industries, Inc. (Symbol: HII) is up about 1.4%, and Howmet Aerospace Inc (Symbol: HWM) is up by about 3.1%. For a complete list of holdings, visit the XAR Holdings page » The chart below shows the one year price performance of XAR, versus its 200 day moving average:
Looking at the chart above, XAR's low point in its 52 week range is $99.76 per share, with $136.815 as the 52 week high point — that compares with a last trade of $105.05. Comparing the most recent share price to the 200 day moving average can also be a useful technical analysis technique -- learn more about the 200 day moving average ».
Exchange traded funds (ETFs) trade just like stocks, but instead of ''shares'' investors are actually buying and selling ''units''. These ''units'' can be traded back and forth just like stocks, but can also be created or destroyed to accommodate investor demand. Each week we monitor the week-over-week change in shares outstanding data, to keep a lookout for those ETFs experiencing notable inflows (many new units created) or outflows (many old units destroyed). Creation of new units will mean the underlying holdings of the ETF need to be purchased, while destruction of units involves selling underlying holdings, so large flows can also impact the individual components held within ETFs.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

SPDR S&P Aerospace & Defense ETF Experiences Big Outflow

Below is Validea's guru fundamental report for ROCKET LAB USA INC (RKLB). Of the 22 guru strategies we follow, RKLB rates highest using our Quantitative Momentum Investor model based on the published strategy of Wesley Gray. This momentum model looks for stocks with strong and consistent intermediate-term relative performance.
ROCKET LAB USA INC (RKLB) is a large-cap value stock in the Aerospace & Defense industry. The rating using this strategy is 66% based on the firm’s underlying fundamentals and the stock’s valuation. A score of 80% or above typically indicates that the strategy has some interest in the stock and a score above 90% typically indicates strong interest.
The following table summarizes whether the stock meets each of this strategy's tests. Not all criteria in the below table receive equal weighting or are independent, but the table provides a brief overview of the strong and weak points of the security in the context of the strategy's criteria.
Detailed Analysis of ROCKET LAB USA INC
More Information on Wesley Gray
About Wesley Gray: Wesley Gray is the founder of Alpha Architect and the author (along with co-author Jack Vogel) of "Quantitative Momentum A Practitioner's Guide to Building a Momentum-Based Stock Selection System". He is also the author (along with co-author Tobias Carlisle) of "Quantitative Value: A Practitioner's Guide to Automating Intelligent Investment and Eliminating Behavioral Errors". He is an industry recognized expert in the application of quantitative investing strategies. Wes is also a former Marine and has his Phd from the Univerisity of Chicago, where he studied under Nobel Prize winner Eugene Fama.
Additional Research Links
About Validea: Validea is aninvestment researchservice that follows the published strategies of investment legends. Validea offers both stock analysis and model portfolios based on gurus who have outperformed the market over the long-term, including Warren Buffett, Benjamin Graham, Peter Lynch and Martin Zweig. For more information about Validea, click here
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Space exploration is rapidly shifting away from being the work of governments to private companies, and Wall Street is taking notice. If analysts at McKinsey & Company are correct, the industry could add an eye-watering $1.8 trillion to the global economy, driven by demand for satellites and their downstream effects on terrestrial companies.
Industry leader SpaceX has already demonstrated the value-creating potential in this industry, offering internet connectivity and payload launches. However, regular investors have no access because it's private, creating a need for viable alternatives. Let's dig deeper to decide if Rocket Lab USA (NASDAQ: RKLB) can fit the bill over the coming years.
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Is Rocket Lab a viable alternative?
Founded in 2006 and going public through a merger with a special purpose acquisition company (SPAC) in 2021, Rocket Lab is one of the few ways investors can get direct access to the rocket launch services industry, currently dominated by SpaceX. Both companies help public and private sector clients transport payloads into space while also selling satellite-related hardware. But they aren't totally the same.
SpaceX focuses on developing larger rockets like its flagship Warship, which may be capable of carrying payloads of 100 to 150 tons when it is complete. Rocket Lab's rockets are significantly smaller. Its largest rocket under development is the Neutron, which will only be able to carry relatively small payloads of 13,000 kg (roughly 13 tons) to low Earth orbit. There is also a big difference in the scale of the two companies' operations.
Elon Musk projects that SpaceX could earn a profit of $15.5 billion in 2025 alone -- driven in large part by its broadband internet service segment, Starlink. Assuming a market average price-to-earnings multiple (P/E) of 29, the company would be valued at $450 billion. For comparison, Rocket Lab's market capitalization is just under $17 billion.
Operational results are mixed
While Rocket Lab is small, its business is growing fast. First-quarter revenue jumped 32% year over year to $123 million as the company launched several missions through its small orbital rocket, Electron, which helps clients deliver microsatellites and observation spacecraft. These types of services are crucial for national security and intelligence agencies that need up-to-date tracking of geopolitical hotspots.
With that said, like many SPAC companies, Rocket Labs seems to have hit the market less-than-ready for prime time. While its top line is growing, margins remain weak. Operating losses actually expanded 37% in Q1 2025 to $59.2 million. And it's hard to see the company establishing a pathway to profitability because of its vast research and development (R&D) budget, which will be hard to cut back in such a technical industry.
While Rocket Lab has around $303 million in cash and equivalents on its balance sheet, this won't actually last very long in the face of operational losses that could exceed $200 million per year if current trends continue. Investors should expect management to eventually turn to outside sources of capital, such as equity dilution, which could hurt the stock price by increasing the number of shares outstanding.
Where will Rocket Lab be in 5 years?
Over the next five years, Rocket Lab looks capable of achieving positive net income, especially when its new Neutron program comes online. This partially reusable medium-sized rocket is designed to compete with SpaceX's workhorse, the Falcon 9, which helped slash the larger company's operating costs when it launched in 2010.
Rocket Lab claims the Neutron will be ready to launch in the second half of 2025. But while this is exciting, it also goes to show how far behind the company is compared to its larger rival. Rocket Lab is not really a good SpaceX alternative right now, and investors may want to wait for more signs of progress before considering a position in the stock.
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Where Will Rocket Lab Stock Be in 5 Years?

Space and defense stocks have gone to the moon this market cycle (pun intended). Rocket Lab (NASDAQ: RKLB) is one of the great beneficiaries of this trend, as the rocket launch, space systems, and defense company has seen its stock soar close to 600% in the last 12 months, absolutely crushing the broad market indices. It recently surpassed a price of $33, hitting a new all-time high in recent weeks.
Investors are optimistic about the future of this space flight disrupter as it aims to compete with SpaceX. Should you buy the stock while it is still below $40? Or is it too late to add Rocket Lab to your portfolio? The answer may surprise you.
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Building the future of space, competing with SpaceX
Rocket Lab is the only independent space provider to come anywhere close to competing with SpaceX, the dominant player in the sector. It began its journey developing the small and nimble Electron rocket, which ferries commercial and defense payloads into space with extreme accuracy. Earlier this month, the 65th Electron rocket was launched into space, with many more waiting in Rocket Lab's backlog.
The next step for Rocket Lab is the debut of its larger Neutron rocket, which will directly compete with SpaceX in size and capabilities. The Neutron will have a much higher payload capability than the Electron, which means more potential revenue per rocket launch. A Falcon 9 launch at SpaceX can cost over $50 million, which should be a comparable figure for the Neutron once it starts performing for customers.
Management believes the Neutron will debut its first launch in 2025, with commercial launches planned in the years after. Rocket Lab's total revenue was only $466 million over the last 12 months, meaning that just a few annual Neutron launches could be quite meaningful to top-line growth.
On top of launches, Rocket Lab has built and bought capabilities in the space systems sector, which encompasses items that you put onto payloads in space such as satellites and solar arrays. It just acquired a company called Geost to help further its vertical integration into the defense satellite sector, a highly important capability to have today. In fact, over 70% of Rocket Lab's Q1 revenue came from the space systems segment, making it a much larger market opportunity than just rocket launches.
A bright but uncertain future
A vertically integrated space company is an ambitious goal, and Rocket Lab is aiming to build it from launch to space gear to eventually software services, according to management. It has a nice narrative, but it is not guaranteed to work.
For one, the Neutron rocket has never even performed a test launch. As investors have recently seen with SpaceX and its Starship tests, mishaps in testing can lead to disastrous (and expensive) results.
Rocket Lab is currently unprofitable, burning $177 million in annual free cash flow as it builds out the Neutron and other space system segments. With just over $500 million in cash and equivalents, the company is only a few years of cash burn and failed tests of the Neutron rocket from running into a liquidity concern. These are unproven markets, and while Rocket Lab is innovating in a field that could potentially be worth tens of billions of dollars someday, its business plan comes with a lot of risks.
Should you buy Rocket Lab stock?
After soaring 600% in the last 12 months, Rocket Lab now trades at a market cap of $15 billion. That brings its trailing price-to-sales ratio (P/S) to a sky-high level of 36. For reference, the S&P 500 trades at an average P/S ratio of 3, or about 10% the level of Rocket Lab.
Yes, Rocket Lab has a higher growth potential than the average stock, and could easily be generating billions of dollars in revenue in the future. It is not guaranteed to do so, though.
Even if Rocket Lab reaches $3 billion in sales -- close to 10x today's level -- it is unclear how much of that would translate to bottom-line profits due to its low gross margins below 30%. If it achieves a bottom-line profit margin of 10%, that would equate to $300 million in annual earnings, or a price-to-earnings ratio (P/E) of over 50 compared to its current market cap. And these earnings will not materialize for many years, if they end up doing so at all.
However you slice it, Rocket Lab looks like an overvalued stock that has gotten ahead of itself in the last year or so. Avoid buying Rocket Lab for your portfolio.
Where to invest $1,000 right now
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Brett Schafer has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Rocket Lab. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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