Rocket laboratory (NASDAQ:RKLB) Investors keep winning. The spaceflight company is up nearly 500% in the past 12 months, more than doubling its returns. Nvidia In the same time frame. It’s been an impressive performance for the stock, led by its rising performance in space launches and satellite manufacturing, which has helped it compete with the dominant player in the sector: SpaceX.
That’s why investors are so bullish on SpaceX competitor Rocket Lab, and why the stock is up nearly 500% in the past year.
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SpaceX has a dominant position in the field of commercial private rocket launches. In fact, just a few years ago, the company led by Elon Musk was the only Western company capable of reliably launching 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. on-board mass) than SpaceX’s workhorse Falcon 9 rocket. This led to the production of the Electron rocket, which can carry small, experimental payloads to orbit. The Electron will be the world’s third most launched rocket in 2024, an impressive feat that shows how much progress Rocket Lab is making to catch up with SpaceX.
Just a few days ago, Rocket Lab demonstrated its true potential with its rocket launch services, flying two missions (on separate launch pads) in less than 24 hours. Investors have been excited about these missions, showing that Rocket Lab has an opportunity to significantly increase its launch cadence in the coming years. The demand is there too. Rocket Lab has a growing backlog of more than $1 billion and thousands of satellites awaiting deployment from commercial customers.
More launches mean more revenue, and thus profits. Since entering the public markets in 2021, Rocket Lab’s revenue has grown 551%, making it one of the fastest-growing companies in the world. If it can pick up the pace of its launches, investors are betting that this growth will continue over the next few years as well.
Rocket Lab has bigger ambitions than just the Electron rocket. Through internal investments and acquisitions, the company has built capabilities to build payloads (satellites, solar cells, space pods) for its commercial customers. Space Systems revenues have grown at a rapid rate in the past few years and now make up the majority of Rocket Lab’s overall revenue.
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