Rocket Lab’s 340% Surge Hits a Roadblock—Is It a Buy Now?

Shares of space vehicle launch company Rocket Lab (NASDAQ:RKLB) have been through a wild ride over the last year. On a 12-month basis, the company’s stock has risen by over 340 percent on extremely strong growth and improving fundamentals.

On a 30-day basis, however, RKLB shares have lost almost 30 percent of their value. Where does this extremely volatile stock go from here, and how likely is it that Rocket Lab will recover the ground it has lost in the past month?

Key Points

• Rocket Lab surged 340% in a year but dropped 30% recently, sparking short-term uncertainty.

• The upcoming Neutron rocket and satellite business could challenge SpaceX and drive future growth.

• Lofty valuation makes RKLB risky, but long-term potential remains strong if execution succeeds.

First, a Look at Rocket Lab’s Stunning Growth

Though the company itself is fairly young, Rocket Lab has racked up some impressive accomplishments so far. First and foremost, the company’s Electron rocket is the second most frequently launched rocket in the US and is the only reusable small-satellite rocket on the market today.

Rocket Lab also has plans to compete directly with SpaceX’s Falcon 9 rocket with its new Neutron rocket. Set to be released this year, Neutron is expected to allow Rocket Lab to deliver larger payloads while still offering partial reusability.

Rocket Lab hopes to offer the Neutron at a lower cost than the Falcon 9, potentially allowing the company to challenge SpaceX’s otherwise impervious grip on the private space vehicle market.

Rocket Lab’s top line has been climbing higher for 13 consecutive and most quarters reveal high double-digit or low triple-digit percentages growth figures. 12-month revenue totals have truly mushroomed from $61 million in 2021 to $436 million in 2024.

Q4 of 2024 was nothing short of astonishing with sales ballooning by 121% to over $132 million while net losses remained stable at $0.10 per diluted share. The quarter also finished a year in which Rocket Lab achieved 16 Electron launches, a 60% increase over 2023’s results.

Rocket Lab is also moving beyond just space vehicles and launching its own satellites. In 2024, the company introduced Flatellite, a small, scalable satellite that can be mass-produced and used to create satellite constellations. This approach has the potential to be quite appealing as an alternative to much more expensive large satellites, especially for commercial customers.

Space Launch Services Set to Grow 100% By 2032

One slight concern about Rocket Lab for investors is the fact that the company’s growth rate is expected to slow in the near future. Q1’s guidance suggests revenues of $117-123 million, about 29 percent higher than the $93 million the company posted in Q1 of 2024.

On a longer-term basis, however, growth may very well regain steam as the company capitalizes on both strong demand for its Electron rockets and the potential of new Neutron rockets.

New investors should not lose sight of the fact that the commercial space market is still extremely young. The market for space launch services is expected to more than double by 2032, and demand from both government and private entities could keep it growing steadily well into the future.

Companies like Rocket Lab that stake out early positions in the commercial space economy may very well become substantially more valuable over time than they are now but what does a snapshot of valuation look like at this time?

Is Rocket Lab Overvalued?

By most standards, RKLB’s valuation doesn’t look particularly attractive. Shares of the company are trading at a massive 23.3x multiple to sales and a 24.3x multiple to book value.

It is, however, important to recognize just how quickly the company’s revenues could grow going forward, as this could make up for some of what might otherwise be a completely untenable valuation.

Analysts currently see Rocket Lab shares rising from their current price of $20.49 to an average target of $24.54 over the next 12 months. While tiny in comparison to the returns of the last 12 months, this would result in a 19.7% upside for shareholders.

Does Rocket Lab Have a Moat?

Although SpaceX undoubtedly has the leading edge when it comes to the commercialization of space vehicles, Rocket Lab is no slouch.

Per the company’s own reporting, Rocket Lab has participated in about 1,700 missions and deployed 210 satellites from its three separate launch pads. Rocket Lab also has a strong list of customers that includes government agencies, private businesses and research institutions.

While the company’s achievements in commercializing space technology are impressive, Rocket Lab is still in the process of building its moat.

SpaceX remains the dominant company in its market, and Rocket Lab has quite a lot of catching up to do. With that said, the company has already carved out a second-place position that could give it a decent amount of room to grow alongside the young and burgeoning space economy.

Will Rocket Lab Stock Recover?

Rocket Lab is likely to recover, especially if the Neutron rocket scheduled to be launched in the second half of 2025 competes well with SpaceX.

While there are never any guarantees in the stock market, RKLB looks like a stock that could have a fairly bright future ahead of it. The company’s rapid growth rate and presence in a generally fast-growing market could both support higher share prices in the future.

Even though Rocket Lab has quite a lot of exciting potential, it’s important to acknowledge that the stock is inherently a fairly high-risk investment. Priced at a very high multiple to its sales and with earnings yet to materialize, the company will likely have to maintain exceptional growth to avoid stagnating share prices.

Much will also hinge on the performance of the Neutron rocket and whether the new rocket system actually allows Rocket Lab to give SpaceX a run for its money. With the Neutron not set to be released until H2 of this year, the market could take something of a wait-and-see approach on RKLB for the next few months.

At the end of the day, Rocket Lab is likely a high-risk, high-reward stock, though it seems more likely than not that the shares will eventually regain the ground they’ve lost in recent weeks. Rocket Lab has the potential to become a meaningful competitor to SpaceX in an industry that could see very strong growth in the coming years and even decades. Though there are certainly plenty of unknowns in the picture for RKLB, the stock may be enticing to highly risk-tolerant investors looking for strong growth opportunities.