Rocket Lab USA, Inc. RKLB recently announced that it has completed its 59th Electron mission, delivering five satellites to Low Earth Orbit for Kinéis, a French Internet-of-Things (IoT) constellation operator. This marked Rocket Lab’s first Electron launch of 2025 and fourth for Kinéis to date.  

This launch undoubtedly strengthened Rocket Lab’s footprint in the space launch services market, which, in turn, might lure investors interested in space companies to add RKLB stock to their portfolio. However, before making any hasty decision, it would be prudent to take a look at Rocket Lab’s share price performance over the past year, the stock’s growth prospects as well as risks (if any) to investing in the same. The idea is to help investors make a more insightful decision.

RKLB Stock Beats Industry, Sector & S&P500

Rocket Lab’s shares have skyrocketed 480.7% in the past year, outperforming the Zacks aerospace-defense industry’s decline of 4.5%. It has also outpaced the broader Zacks Aerospace sector’s rise of 5.8% as well as the S&P 500’s gain of 21% in the same time frame.

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A similar stellar performance has been delivered by other industry players, such as Embraer ERJ, RTX Corp. RTX and, Leidos Holdings LDOS, whose shares have surged 137.4%, 40.4% and 24.2%, respectively, over the past year.

What’s Been Boosting RKLB’s Share Price?

The commercial space technology market, encompassing communication, Earth observation and navigation services, has expanded significantly over the past decade. Additionally, rising global tensions have prompted governments to enhance national security, driving demand for military satellite deployments. These factors have fueled demand for Rocket Lab’s launch services, spacecraft manufacturing and on-orbit management solutions. 

Notably, Rocket Lab space systems technology has enabled more than 1,700 missions globally, ranging from complex interplanetary scientific spacecraft like the James Webb Space Telescope to critical communications constellations.

The company’s Electron small launch vehicle, designed for rapid, real-time intelligence via small payloads, has met the growing need for small launch services. Since its 2017 debut, Electron has become the leading small satellite launcher, successfully deploying more than 197 spacecraft across 49 missions for government and commercial clients as of Sept. 30, 2024.

Successful mission launches, like the latest one, bolster Rocket Lab’s revenues, which surged 55% year over year in the third quarter of 2024. Such strong financial performance is likely to have boosted investor confidence, contributing to the stock’s price gains at the bourse over the past year.

What Lies Ahead for RKLB Stock?

According to an April 2024 report by the World Economic Forum, the global space economy is projected to reach $1.8 trillion by 2035 as satellite and rocket-enabled technologies become more widespread. Such growth prospects offer solid opportunities for Rocket Lab to enhance its footprint in the global space economy, with its Electron rocket ranking as the second most frequently launched orbital rocket among U.S. companies.

To maintain its competitive edge, Rocket Lab continues to innovate. A key development is its reusable-ready Neutron launch vehicle, designed for medium-capacity missions. Neutron will significantly expand Rocket Lab’s payload capacity, supporting up to 15,000 kg for expendable launches to low Earth orbit, with reduced capacities for reusable missions and higher orbits. The vehicle is expected to accommodate nearly all spacecraft configurations Rocket Lab anticipates to launch through 2029.

With strong market growth and continuous advancements, Rocket Lab is well-positioned for future expansion. RKLB’s strategic innovations, alongside the increasing demand for launch services, create robust growth opportunities, reinforcing its role as a key player in the evolving space economy.

A quick sneak peek at its near-term estimates mirrors similar growth prospects.

Estimates for RKLB Stock

The Zacks Consensus Estimate for first-quarter and full-year 2025 sales suggests an improvement of 48.8% and 31.6%, respectively, year over year.

The upward estimate revision in RKLB’s 2025 earnings estimate over the past 60 days reflects increased investors’ confidence in its earnings growth capacity. However, the bottom-line estimate for first-quarter 2025 shows no movement.

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Risks to Consider Before Choosing RKLB Stock

Despite the aforementioned growth opportunities, RKLB faces certain challenges at present, which one should consider before investing in the stock. One such hazard is the high operating expenses that the company incurs due to its consistent investments in developing new products and enhancing the existing ones. 

Such high operating expenses largely offset the benefits of strong revenue growth, thereby causing RKLB to report quarterly losses. To this end, Rocket Lab expects its operating expenses to increase in the future. If RKLB’s revenue growth does not increase enough to offset the anticipated rise in operating expenses, it may not be able to achieve profitability.

RKLB Stock Trading at a Premium

In terms of valuation, RKLB’s forward 12-month price-to-sales (P/S) is 22.56X, a premium to its industry’s average of 1.61X. This suggests that investors will be paying a higher price than the company's expected sales growth compared to that of its industry’s P/S ratio.

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Should You Buy RKLB Stock Now?

To conclude, investors interested in Rocket Lab should wait for a better entry point, considering its premium valuation and the challenges it is facing in terms of high expenses.

However, those who already own this Zacks Rank #3 (Hold) company’s shares may stay invested due to its upbeat near-term sales estimates, upward revision in its 2025 earnings estimate and solid share price performance over the past year.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

 

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Rocket Lab USA, Inc. (RKLB) : Free Stock Analysis Report

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