Rocket Lab (NASDAQ: RKLB) investors just keep on winning. The space flight company is up around 500% in the last 12 months, which is more than double the returns of Nvidia in that same time frame. It has been an incredible run for the stock, led by its increasing performance in space launches and satellite manufacturing, helping it compete with the dominant player in the sector: SpaceX.
Here’s why investors are uber-optimistic about SpaceX competitor Rocket Lab, and why the stock is up around 500% in the last year.
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SpaceX has a dominant position in private commercial rocket launches. In fact, just a few years ago, the Elon Musk-led company was virtually the only Western company able to reliably launch rockets into orbit. What happened a few years ago? Rocket Lab began competing for contracts.
In order to enter the market, Rocket Lab targeted rocket launches with much smaller payloads (i.e., the mass on board) compared to SpaceX’s workhorse Falcon 9 rocket. This led it to produce the Electron rocket, which can take small and experimental payloads to orbit. Electron will be the third most launched rocket globally in 2024, which is an impressive feat and shows how much Rocket Lab is making progress to catch up with SpaceX.
Just a few days ago, Rocket Lab showed its true potential with its rocket launch services, performing two missions (on separate launch pads) in less than 24 hours. Investors have gotten excited about these missions, showing that Rocket Lab has a chance to greatly increase its launch cadence in the coming years. The demand is there, too. Rocket Lab has a growing backlog worth over $1 billion and thousands of satellites waiting from commercial customers to be deployed.
More launches mean more revenue, and eventually profit generation. Since entering the public markets in 2021, Rocket Lab’s revenue has grown 551%, making it one of the fastest-growing businesses in the world. If it can increase its launch frequency, investors are betting that this growth will continue for the next few years as well.
Rocket Lab has larger ambitions than just the Electron rocket. Through internal investments and acquisitions, the company has built up capabilities to build the payloads (satellites, solar cells, and space pods) for its commercial customers. Space systems revenue has grown at a rapid rate in the last few years and now makes up the majority of Rocket Lab’s overall revenue.
