Is Rocket Lab USA Stock a Buy Now?

Rocket Lab USA (NASDAQ: RKLB), a producer of reusable orbital rockets, went public by merging with a special purpose acquisition company (SPAC) on Aug. 25, 2021. It opened at $11.58 on its first trading day, but it sank to an all-time low of $3.72 on June 29, 2022.

Rocket Lab's stock stumbled as it slightly missed its own pre-merger estimates. Rising interest rates also compressed its valuations, drove investors toward more conservative investments, and cast a harsh light on its persistent losses.

However, it bounced back as it launched more rockets and won new contracts. By Jan. 3, 2025, its stock closed at a record-high of $31.57 per share. But as of this writing, it trades at just under $20. Does that near-40% pullback represent a buying opportunity for growth-oriented investors?

Image source: Getty Images.

A growing underdog in the orbital rocket market

Rocket Lab's main reusable rocket, the Electron, can carry small payloads of up to 300 kilograms into space. It's been successfully launched 63 times from three dedicated launch pads and used to deploy 224 satellites. Its next rocket, the Neutron, will have a higher maximum capacity of 15,000 kilograms when it arrives in the second half of this year.

Rocket Lab already serves big customers like NASA, the U.S. Space Force, the Swedish National Space Agency, Capella Space, and BlackSky Technology (NYSE: BKSY). From 2021 to 2024, it accelerated its launches and stabilized its adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) margins.

Data source: Rocket Lab USA.

Rocket Lab is much smaller than SpaceX, which launched 134 Falcon rockets in 2024, but it still has plenty of irons in the fire. Over the past year, it shipped two research satellites for NASA and secured an additional study contract for its next Mars mission. It agreed to deploy a constellation of 25 satellites for Kinéis, a global Internet of Things (IoT) connectivity provider, signed a multi-year Electron launch contract with Japan's Institute for Q-shu Pioneers of Space (iQPS), and made more progress on several U.S. national defense programs.

But that's not all. It also joined a team led by Kratos Defense & Security Solutions to test out hypersonic flights, signed a satellite launch contract with Airbus, and provided support for Firefly Aerospace's upcoming lunar mission. NASA and a leading satellite network operator already plan to use its upcoming Neutron rockets.

Last month, Rocket Lab agreed to buy Mynaric, a leading laser communications provider, as its "latest strategic step" toward becoming an "end-to-end space company." All of these catalysts should drive it to launch more Electron and Neutron rockets in 2025 and beyond.

Is Rocket Lab reasonably valued relative to its growth potential?

Analysts expect its revenue to rise 33% this year and grow another 54% to $894 million in 2026. They expect its adjusted EBITDA to improve from negative $97 million in 2024 to $72 million in 2025, and then finally turn positive at $75 million in 2026. Its adjusted EBITDA margins are improving as it scales up its business, streamlines it spending, and expands its higher-margin space systems division to offset the lower margins of its launch services division.

With an enterprise value of $9.33 billion, Rocket Lab trades at 10 times next year's sales. It certainly isn't cheap, but it could be reasonably valued if it eventually becomes as big as SpaceX -- which was valued at a whopping $350 billion after a secondary stock sale last December.

Is it the right time to buy Rocket Lab's stock?

Rocket Lab generates most of its revenue in the U.S., but it's still exposed to tariffs because it imports some of its components from other countries. A protracted economic downturn could drive some of its customers to rein in their spending, Congress recently forced the U.S. Space Force to trim its full-year budget as part of its new spending bill, and the Trump administration wants to cancel the Biden-era CHIPS and Science Act, which subsidizes Rocket Lab and many other domestic tech companies. All of those unpredictable headwinds could throttle Rocket Lab's near-term growth and compress its valuations.

That said, Rocket Lab is still a good long-term investment if you expect NASA and private companies to launch more satellites and payloads into space. It's one of the few SPAC-backed space stocks that survived the industrywide wash-out over the past three years, and its backlog is growing rapidly as it locks in more contracts.

So if you plan to hold Rocket Lab for at least a few years, it might be a great time to load up on the stock. However, it will certainly remain volatile for the foreseeable future -- so investors should only accumulate its shares if they can tune out the near-term noise and ride out its volatile swings.

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