If the stock market crashes, one of the first stocks I’ll be watching is Rocket Lab (NASDAQ: RKLB). Not because I expect Rocket Lab to hold up particularly well during a crash. Quite the opposite, actually.
You see, high-growth stocks with ambitious expectations can get crushed when investors start dumping risk. And Rocket Lab has reached a valuation where plenty of future growth is already baked into the stock. It’s already valued at nearly $40 billion, or roughly 50 times trailing sales, meaning investors are paying a hefty premium for growth that has yet to materialize. But underneath that valuation is a space company that is becoming increasingly difficult to ignore.
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Rocket Lab generated a record $234 million in second-quarter revenue, up 62% year over year. Its backlog reached another record at $2.36 billion, up 137%. The company also said it had secured more than $437 million in new launch contracts during the quarter and shortly afterward. That’s a very different business from the speculative space start-up Rocket Lab was just a few years ago.
More than rockets
Rocket Lab is probably best known for Electron, its small-launch rocket. Electron has now completed 96 missions, including three launches in September alone. But launch is only part of the business.
Rocket Lab builds satellites, solar cells, flight software, separation systems, and other spacecraft components. It’s increasingly positioning itself as an end-to-end space company capable of building the satellite, launching it, and supporting the overall mission. And government contracts are becoming a bigger part of that opportunity.
In July, Rocket Lab landed a $266 million U.S. Space Force contract covering 12 suborbital launches, with options for six more. It was also awarded a $397 million contract to build and launch spacecraft for the Space Force’s Space-Based Airborne Moving Target Indicator program.
Then there’s Neutron. This is Rocket Lab’s larger reusable rocket that’s designed to compete for constellation deployments, national-security missions, and other launches that Electron simply can’t handle. The company already has customers lined up, including a confidential customer that booked five Neutron missions as part of Rocket Lab’s largest launch agreement at the time.
