Is Rocket Lab USA Stock a Buy Now?

Over the past few decades, private companies have expanded the possibilities of space exploration and research. According to estimates from consultancy McKinsey, the space economy is projected to grow to $1.8 trillion by 2035.

With such substantial growth ahead and innovation across the industry, the space economy is emerging as a potentially significant investment opportunity.

While companies like SpaceX lead the way, they remain private. Alternatives like Rocket Lab USA (NASDAQ: RKLB) are making waves in the small-satellite launch market, and it is the second-most utilized launch provider in the U.S.

The space company is expanding its services, including lunar exploration and satellite deployment, in response to increasing demand. Here's what investors should know about Rocket Lab and its long-term opportunity today.

Second in space launches in the U.S.

Rocket Lab USA, founded in 2017, has enjoyed strong demand for its services over the past several years. The company generated $436.2 million in revenue in 2024, representing a 78% increase from the previous year.

Strong growth has been driven by increasing demand, as evidenced by its rising backlog of orders, which now stands at $1.1 billion. That sizable figure indicates strong demand and provides some visibility into its future revenue generation. The company anticipates recognizing about 56% of this backlog as revenue over the next year.

Since its founding, Rocket Lab has completed 66 launch missions, including 16 in 2024, making it the No. 2 launch company in the U.S. However, it remains well behind SpaceX, which launched 132 rockets last year and has larger rockets and the ability to transport bigger payloads.

Rocket Lab aims to close this gap with its Neutron rocket, which it expects to launch sometime this year. The rocket represents a significant development for Rocket Lab since it will allow transport of larger payloads -- nearly 40 times larger than its Electron launch vehicle.

This capability is vital as demand for launching satellites and other cargo continues to grow. The larger rocket will also enable Rocket Lab to compete for larger contracts and achieve higher profits and margins per launch.

A Rocket Lab Electron. Image source: Rocket Lab USA.

Pursuing every part of the space value chain

Besides its launch vehicles, Rocket Lab is carving out a niche in the space systems section of the broader space economy. For example, it acquired the German company Mynaric for $75 million. It provides laser optical- communications terminals for air, space, and mobile applications. By acquiring Mynaric, Rocket Lab can scale up production of optical communication terminals, which are crucial for satellite-to-satellite connectivity.

The German company was already a subcontractor for Rocket Lab, and the integration will give it greater control over its supply chain, allowing it to operate more efficiently.

CEO Peter Beck said that his company would pursue every part of the space value chain and that it was "closing in on the final step and most valuable part of the space economy: operating our own constellations to provide data and services from space."

Rocket Lab's finances

As an investor evaluating opportunities within the aerospace sector, it's crucial to analyze the current financial state of Rocket Lab. Delays in the launch of the Neutron rocket could hinder its near-term prospects and would likely weigh on the stock in the short term.

Furthermore, the company is grappling with sizable operational losses, reflecting its high cash burn, which may be a red flag for conservative investors seeking stability. Last year, revenue was $436.2 million while the cost of revenue and operating expenses soared to $626 million. As a result, the company had an operating loss of $190 million.

This trend continued in the first quarter, with an operating loss of $59 million on $122.5 million in revenue.

RKLB Revenue (Quarterly) data by YCharts.

Rocket Lab has expressed optimism about its path toward profitability. Analysts project the company could achieve positive cash flow by 2026 and earnings by 2027.

Is Rocket Lab USA right for you?

Rocket Lab's future is bright. Its backlog of orders is significant, and it has been included as part of the U.S. Space Force's $5.6 billion National Security Space Launch program. As part of this, Rocket Lab has been selected to compete for the Department of Defense's national security missions for its National Security Space Launch (NSSL) Phase 3 Lane 1 program. If chosen, its success here could lead to stable and potentially lucrative contracts over the long term.

As investors, we must strike a balance between risk and reward and understand what we are getting into. Rocket Lab USA is a fast-growing company in the emerging space economy. It is positioning itself not just as a launch company, but as one that also operates across the entire space value chain.

Rocket Lab's current financials may deter those seeking steady, reliable returns. However, for growth-focused investors, today could be an opportunity to get in at ground level with a company in an industry expected to experience significant growth in the years to come.

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Courtney Carlsen has positions in Rocket Lab. The Motley Fool has positions in and recommends Rocket Lab. The Motley Fool has a disclosure policy.