Space Pioneer At A Discount: The Cautious Case For Rocket Lab Now

2025-03-05 03:49:03 ET

Summary

• RKLB has corrected 33% since my original analysis, now trading at $18.73 within my fair value range of $16-18, offering a more balanced risk-reward profile.
• Q4 revenues surged 121% year-over-year to $132.4M, with Space Systems now contributing 65% of revenue, while gross margins improved to 34%.
• Despite promising growth, operating losses of $51.5M and continued R&D investment in Neutron highlight the long path to profitability.
• Neutron rocket development, targeting 2025 launch, remains the critical catalyst that could transform RKLB's economics with 7x higher revenue per launch.
• At 21x sales (down from 40x), the valuation now better balances growth potential against execution risks, making RKLB a cautious buy for long-term space investors.

Where We Stand Today

At the end of February, when Rocket Lab ( RKLB ) was trading in the $28-30 range, I wrote an evaluation in which I called the stock overpriced based on the growth trajectory and expected growth profile of the company. I suggested decreasing positions and proposed a fair value of $16-18 a share....

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