The Best Space Stock to Invest $100 in Right Now

Space exploration has undergone an incredible transition from government-led initiatives to ventures led by the private sector, with companies like SpaceX paving the way. According to McKinsey, the space economy is poised to skyrocket, potentially reaching a staggering $1.8 trillion by 2035.

SpaceX might be on some investors' radar, but it isn't publicly traded. For those looking to dive into the space economy, Rocket Lab USA (NASDAQ: RKLB) presents an excellent alternative. Fresh off a year of record launches, Rocket Lab has secured its position as the second-most-used launch service in the U.S., just behind SpaceX.

On top of that, Rocket Lab is set to unveil its larger rocket this year, which could seriously boost its margins and expand its capabilities. Here's why Rocket Lab could be a good opportunity to invest in the space economy today.

Rocket Lab is making headway in the space economy

Since its creation in 2017, Rocket Lab has successfully completed 61 launch missions, including a record 16 in 2024. The company has become a go-to partner for companies launching small satellites into orbit with its flagship Electron rocket, a small-lift launch vehicle designed to carry payloads to low Earth orbit.

While Rocket Lab posted a record year, the company remains well behind SpaceX. Last year, SpaceX sent 138 rockets into space, far more than any other space company. SpaceX has a 15-year head start on Rocket Lab. It also has larger rockets and greater payload capacity, but this is one area where Rocket Lab intends to catch up.

Rocket Lab has been developing its Neutron rocket for several years now. This reusable medium-lift rocket can carry payloads of up to 13,000 kilograms (28,660 pounds) to low Earth orbit, making it 40 times larger than the company's small-lift Electron launch vehicle.

This larger launch vehicle will help Rocket Lab better compete with SpaceX's Falcon 9 launch vehicle and should enable Rocket Lab to earn civil and defense contracts with larger payloads. The company projects that its Neutron rocket could earn 6 times the revenue and profit of its Electron vehicle, paving the way for growing margins and more significant profits.

Image source: Rocket Lab USA.

Consider the following risks

The company planned to launch its Neutron rocket in mid-2025, but it has pushed this timeline back slightly and is now targeting the second half of this year for a launch.

Bleecker Street Research (which is related to the short-seller Bleecker Street Capital) says that industry experts it talked to think the launch will happen between mid-2026 and mid-2027 because of production delays. However, investors should remember that Bleecker Street Capital is short Rocket Lab, meaning it profits when Rocket Lab's stock declines.

Another risk to watch is Rocket Lab's lack of profitability. Last year, it had a net loss of $190 million on $436 million in total revenue. The loss is primarily due to research and development costs for the Neutron rocket.

The company currently has $484 million in cash and cash equivalents and marketable securities. Last year, its free cash flow, which is cash left over after operational expenses and capital expenditures, was negative $116 million. Given its cash situation, Rocket Lab should have enough fuel to fund its business for the next few years.

This lesser-known business segment is thriving

Right now, Rocket Lab's primary moneymaker isn't launching rockets. It is the space systems business, the business of providing spacecraft engineering and design services, components, and on-orbit mission operations. Last year, Rocket Lab earned $116 million in gross profit overall, and 70% of this came from its space systems business.

Image source: Getty Images.

The company boosted this business by acquiring Mynaric AG, which provides optical communication terminals crucial for satellite-to-satellite connectivity. Mynaric is a subcontractor to Rocket Lab for the $515 million prime contract with the Space Development Agency. The acquisition gives Rocket Lab more control over the supply chain and helps improve production efficiency.

In addition, the company has a substantial backlog of $1.07 billion, driven by continued bookings for launches and space systems.

Buy Rocket Lab for exposure to the growing space economy

If you're buying Rocket Lab stock today, it's essential to maintain a long-term outlook. It could be several years before the company becomes profitable, and the timing hinges on the launch of its Neutron rocket and winning more government contracts.

Today, Rocket Lab USA is down 41% from its 52-week high, giving investors an opportunity to buy the dip on the promising space stock. Given its lack of profitability and questions about the timing of its Neutron rocket launch, the stock is vulnerable to wide price swings.

That said, I like Rocket Lab for its growing space systems business and the eventual launch of its larger rocket, which will help the company carve out a significant role in the growing space economy.

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Courtney Carlsen has no position in any of the stocks mentioned. The Motley Fool recommends Rocket Lab USA. The Motley Fool has a disclosure policy.