Rocket Lab’s $5.6B Launch: Genius Move or Pricey Gamble?

Rocket Lab stock is up 800% in a year.

Let that sink in.

No earnings. No profitability until maybe 2027.
And yet, people are piling in like it’s the next SpaceX.

Rocket Lab has just secured a $5.6 billion defense contract, is receiving government funding in abundance, and is developing its new Neutron rocket. It’s targeting the same orbit SpaceX dominates.

But here’s the red flag: The stock’s trading at nearly 50x book value. If they miss, even by a little, this whole thing could crater.

So is Rocket Lab building a full-stack space empire… or just orbiting on hype?

Let’s get into it.

Rocket Lab’s Overview

Rocket Lab is an aerospace company that specializes in small-satellite missions. Its most successful product to date, the Electron, is a partially reusable orbital launch rocket that can carry up to 200kg into sun-synchronous orbit, a path that lets satellites capture images of the same spots on Earth under the same lighting conditions. 

The Electron Rocket has had 68 successful launches and a couple of failed ones as of June 28, 2025, and is powered by the company’s proprietary Rutherford engine, which is its main reusable component. 

Rocket Lab is also working on its new Neutron rocket, the company’s answer to SpaceX’s Falcon 9 rockets, designed for bigger payloads and cargo or crew transport. The company aims to make Neutron fully reusable from the start, including its landing legs and a hinged fairing, for rapid turnaround, and the rocket is expected to launch, pun intended, in late 2025. 

Rocket Lab has two operating segments: Space Systems, tagged as “Product” in company filings, which covers its spacecraft platforms, satellite components, and related hardware sales; and Launch Services or simply “Service,” which includes its rocket launches, mission management, and other launch-related operations. 

News & Stock Price

So, how come the company’s stock has exhibited massive growth over the past year? Well, back in May, Rocket Lab announced a partnership with the US Air Force to support its planned point-to-point cargo transport using the Neutron rocket. 

The incoming rocket has also been chosen for the National Security Space Launch program by the US Space Force. The initiative is valued at $5.6 billion over a five-year ordering period. If you think about that, it’s impressive that Rocket Lab is already attracting that much attention. And that attention is well reflected in its stock price. 

Currently, RKLB is trading at around $44, which means it’s up about 800% over the last 52 weeks. It’s also 16% away from its all-time high of $53.44. So, it’s safe to say that RKLB stock is treading new ground. 

Financials

But is the massive uptrend supported by fundamentals? Let’s see. 

Rocket Lab’s 2024 year-end report made a lot of investors happy. The company’s top line grew by 78%, and while losses increased from $182.6 million to $190.2 million, the increase was only a single-digit percentage at -4%, unlike the last two years. 

Quarterly, revenue is on a general uptrend, with Q1 2025 improving by 32%, while losses widened by 37% year-on-year. So, a bit of a mixed bag. 

Meanwhile, the company has a 0.98 debt-to-equity ratio, indicating that it’s not overleveraged and suggesting a balanced capital structure that can support growth without excessive financial risk. 

You’ll notice that the price-to-earnings ratio, the way most investors value a company, is zero, since, again, Rocket Lab is still operating at a loss. 

However, here’s where things get a bit concerning. The company has a book value or net asset value of 94 cents per share, but its price-to-sales and price-to-book ratios are almost 50, meaning investors are highly dependent on speculation and are pricing in extraordinary future growth. 

With the earliest projected profitability set for 2027, investors who buy at today’s prices may be undertaking a significant amount of risk. 

All-In-One Business Model

Well, maybe it has something to do with its business model. So I’ve talked about its Electron and upcoming Neutron rockets, but I haven’t covered its other revenue sources, namely, components for spacecraft like star trackers and reaction wheels, solar panels and other solar solutions, composite structures, separation systems, and flight and space mission software.

It also offers customizable satellite buses through its Photon platform. Satellite buses are standardized platforms that support various satellite payloads for different space missions. 

That means Rocket Lab is offering a full-service, end-to-end spaceflight solution for clients. Mission integration, launch, and operations as a bundled service, all from one provider. I don’t know about you, but I have everyday tasks that I’d like to have bundled all in one, such as event planning, taking trips, or paying utilities.

Growth of The Space Industry

There’s also the fact that the space industry is booming. New developments and increasingly privatized operations are driving a growing demand for fast, flexible, and affordable launch services. We’re talking government, commercial, and even academic circles looking into launching rockets into space. 

For the latter two, which don’t necessarily have the infrastructure to build their space programs from the ground up, Rocket Lab’s all-in-one approach may look like the best option. 

US Defense Contracts

Now, while the commercial sector may need some time to ramp up the demand, the same cannot be said for Rocket Lab’s government contracts. As mentioned earlier, the company’s Neutron rocket is in the running for the U.S. Space Force’s NSSL Phase 3 Lane 1 contract, a deal worth up to $5.6 billion. 

Aside from that, the company has been selected to participate in the US and the UK’s Hypersonic testing programs. The US initiative, named EWAAC, is valued at $46 billion, while the UK’s HTCDF is valued at $1.3 billion. 

EWAAC: Enterprise‑Wide Agile Acquisition Contract

HTCDF: Hypersonic Technologies & Capability Development Framework

When you look at it that way, Rocket Lab’s future seems quite bright, doesn’t it? 

Headwinds

However, that doesn’t mean it has a clear path to certain success. Rocket Lab faces significant headwinds that investors need to be aware of. 

Development and Expenditure

In the simplest terms, developing rockets is expensive. Even with Neutron reportedly costing less to develop than most reusable medium-lift rockets, at a ballpark figure of around $300 million, that still means the company’s R&D expenses will remain high in the near term. That means extended cash burn, which has the potential to delay the company’s profitability goal. 

And if its cash on hand isn’t enough, the company will likely resort to secondary stock offerings, potentially diluting shareholders in the long run. Remember, its current price level is being propped up by speculation rather than solid fundamentals, at least at the moment. Investors expect rapid growth, and failing to deliver may negatively impact investor optimism, potentially causing the price to collapse. 

Competition

Then, there’s the looming, rocket-shaped shadow on the horizon – Elon Musk’s SpaceX. Currently, SpaceX dominates the commercial and government launch markets due to its sheer volume, large client base, and product reusability. Rocket Lab is gonna have to prove it has what it takes to take on the giant. 

And even then, the company is not alone in this race. Other players like Relativity Space, Firefly, Astra, and ABL are taking their slices of the market, which may increase pressure on Rocket Lab in the long run. 

Dependence on Government Contracts

Lastly, and this is the company’s biggest challenge, is its overdependence on government contracts. Rocket Lab doesn’t indicate which portion of its revenue is from contracts. However, with most of the company’s announcements centered on defense, intelligence, and space agency work – well, if it walks like a duck and it talks like a duck, it probably isn’t a moose. 

This creates risk with budget cuts, re-prioritization, contract delays, and regulatory scrutiny. For a company aiming to scale rapidly, this kind of uncertainty is less than ideal. 

My Take

So, what do I think of RocketLab? Well, it’s got a lot going for it. Its position in the space industry isn’t nothing, and the interest around the Neutron rocket shows it’s aiming for more than just small satellite launches. Plus, the company’s vertical integration and full-service business model give it a competitive advantage. 

That said, SpaceX isn’t going away soon, and how Rocket Lab will navigate the red years before profitability remains to be seen, especially with its high R&D costs and reliance on government contracts. 

So, with a $51 high target price, I think RKLB is a soft buy but a definite stock to watch. If the price pulls back to, let’s say, the $35 to $30 level without any significant negative catalyst presenting itself, then I’ll probably bump my rating up to a strong buy.