Rocket Lab USA (RKLB) experienced significant growth in its stock value over the past year. Starting from approximately $4 in the spring of 2024, the stock surpassed $30 by January of the following year, marking a more than sevenfold increase. Initially met with pessimism, investor sentiment has shifted positively due to the company’s frequent rocket launches and its expansion as an integrated space economy platform competing with industry giants like SpaceX.
However, recent developments have led to renewed investor pessimism. Analysts now speculate that Rocket Lab’s highly anticipated Neutron rocket may not be ready by 2025, contrary to management claims. This skepticism has contributed to a steep decline in stock value, dropping 40% from recent highs.
Rocket Lab has become the second private company in North America to successfully launch rockets for commercial and government clients, primarily focusing on small payloads with its Electron rocket, a niche market not catered to by SpaceX. In 2024, Rocket Lab achieved a 100% mission success rate with 16 Electron launches. The company anticipates even more missions for the Electron in 2025.
To enhance customer offerings, Rocket Lab has rapidly developed a Space Systems division that constructs products for launches, generating $311 million in revenue in 2024, a significant increase from the previous year. Combined revenues for the company reached $436 million in 2024, highlighting its rapid growth and positioning it as one of the fastest-growing public companies.
Despite impressive growth, there are concerns over potential delays in the Neutron rocket project. Management plans to debut and test this larger rocket in 2025, which could substantially increase revenue per launch. While expectations for the Neutron launch have driven the stock upwards, some analysts caution that Rocket Lab’s aggressive timeline might lead to delays until 2026 or 2027, potentially increasing development costs and necessitating additional fundraising efforts, which could lower the stock price.
As Rocket Lab continues to establish itself as a reputable player in the space industry, questions remain about the Neutron rocket’s timeline. If there are no delays, the company could experience significant revenue growth and profit increases. Additionally, future plans to establish its own satellite constellation, similar to SpaceX’s Starlink, could further evolve its business model.
Currently, Rocket Lab’s market cap of $9.5 billion is based on optimistic projections of the Neutron rocket’s success, which might not fully reflect the potential challenges. With the company generating less than $500 million in revenue and incurring annual losses close to $200 million, it may be prudent to monitor Rocket Lab’s stock closely as it navigates these uncertainties, despite the recent 40% stock decline.
