MW Rocket Lab stock soars amid strong momentum for the space-launch company's Electron rocket

By James Rogers

Rocket Lab, which reported third-quarter results Tuesday, signed $55 million in new Electron launch contracts during the quarter

Shares of Rocket Lab USA Inc. are up 23.7% in premarket trades after the space-launch company highlighted strong demand for its Electron rocket during its third-quarter results Tuesday.

The stock is on pace for its largest daily percentage increase since March 10, 2021, when it gained 36.1%, Dow Jones Market Data show.

In prepared remarks, Rocket Lab $(RKLB)$ CEO Sir Peter Beck said that the company has successfully launched 12 Electron rockets year-to-date, making 2024 a record year for launches, "with more still to come." The company also signed $55 million in new Electron launch contracts during the quarter, he added. During a conference call to discuss the results Beck explained that there were three launches of the rocket during the quarter and Electron's average sales price is also 60% higher than when it first started flying. Electron's first commercial launch was in 2018.

Related: Rocket Lab stock climbs more than 6% after KeyBanc raises price target

"RKLB continues to execute on Electron launches and meaningfully improved turnaround times, including two successful launches within eight days in 3Q and a 4Q launch with expedited turnaround from the initial agreement (10 weeks between contract signing and launch)," wrote KeyBanc Capital Markets analysts Michael Leshock and Philip Gibbs, in a note released Tuesday. "We see further runway for pricing in the years ahead as demand continues to far outweigh supply."

Rocket Lab also provided an update on its new Neutron rocket Tuesday, explaining that the company signed a launch service agreement for multiple Neutron rocket launches with "a confidential commercial satellite constellation operator." The deal signifies the beginning of a collaboration that could see Neutron deploy the entire constellation, according to Rocket Lab.

"Recall the Neutron medium-lift reusable launch will be able to deploy up to 13,000 kg into low Earth Orbit for commercial and government customers," wrote Cantor analyst Andres Sheppard, in a note released Tuesday.

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Speaking during the conference call, Rocket Lab executives reiterated that the first Neutron test launch will be in 2025. This will be followed by three launches in 2026, according to Rocket Lab CFO Adam Spice. "The first customer for Neutron that we announced today, that's obviously consuming some of that capacity in 2026," he added, during the conference call.

"We are encouraged by Neutron's progress as its first launch timeline is unchanged ("no earlier than mid-2025"), and RKLB announced it recently signed a launch contract with a confidential customer for its initial revenue-generating Neutron launches slated to begin in 2026," wrote KeyBanc Capital Markets analysts Leshock and Gibbs, in the note released Tuesday. "This marks a major milestone in Neutron's development, and underscores the persistent tightness in the supply/demand environment for launch services," he added.

Rocket Lab's third-quarter revenue was $104.8 million, a 55% increase on the prior year's quarter, and above the FactSet consensus of $102.3 million. The company lost $51.9 million, or 10 cents a share, in the quarter, compared with a loss of $40.6 million, or 8 cents a share, in the same period last year. Analysts surveyed by FactSet were looking for a loss of 11 cents a share.

Related: Rocket Lab's Archimedes engine test 'a significant catalyst' for new Neutron rocket, Cantor says

The company also gave record fourth-quarter revenue guidance between $125 million and $135 million.

Shares of Rocket Lab are up 165.1% in 2024, outpacing the S&P 500 index's SPX gain of 25.5%.

-James Rogers

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November 13, 2024 08:18 ET (13:18 GMT)

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