An end-to-end space company specializing in launch services, Rocket Lab (NASDAQ:RKLB) punched a hole in the clouds on Tuesday. Late last night, management announced that it successfully launched seven satellites for NASA, the Space Flight Laboratory (under the University of Toronto Institute for Aerospace Studies) and Spire Global (NYSE:SPIR). Subsequently, RKLB stock popped up 10% in the early afternoon hours.
According to the accompanying press release, the operation occurred from Rocket Lab’s commercial spaceport Launch Complex 1 in New Zealand. The mission — labeled “Baby Come Back” — represented the company’s seventh launch for the year. With this launch, the company has conducted operations involving Electron (the only reusable orbital-class small rocket) 39 times.
Per the release, “[i]n addition to delivering a flawless primary mission of deploying customer satellites to orbit, Rocket Lab completed a successful ocean splashdown and recovery of Electron’s first stage as part of the Company’s program to make Electron the world’s first reusable small rocket.”
Following both the launch and the recovery of the rocket’s first-stage component, Rocket Lab founder and CEO Peter Beck expressed delight at delivering another successful Electron undertaking. “With this mission we’ve made big strides toward reusability with Electron and we are now closer than ever to relaunching a booster for the first time.”
Risks and Rewards Orbit Around RKLB Stock
Although today’s news adds enormous credibility to Rocket Lab, RKLB stock still has plenty of challenges ahead. True, shares have almost doubled in value so far this year thanks to the recent rally. However, since making its public market debut — via a merger with a special purpose acquisition company (SPAC) — shares are still down about 23%.
On the financial front, Rocket Lab doesn’t immediately inspire confidence. While the company offers relatively decent stability in the balance sheet — supported by a cash-to-debt ratio of 2.61 times that ranks better than nearly 70% of its aerospace counterparts — it’s largely a growth-oriented enterprise.
For instance, in the first quarter of 2023, Rocket posted revenue of $54.9 million, up nearly 35% from the $40.7 million posted one year prior. However, net losses expanded unfavorably to $45.6 million from $26.7 million during the previously mentioned period.
Nevertheless, the opportunity for RKLB stock is also profound. According to information compiled by McKinsey & Company, the underlying space economy — which presently stands at about $447 billion — may jump to a $1 trillion valuation by 2030.
Moreover, Mordor Intelligence points out that the satellite manufacturing and launch systems market size may grow from the current $190.8 billion to approximately $359.6 billion by 2028, representing a compound annual growth rate (CAGR) of 13.52%.
Why It Matters
Sentiment on Wall Street remains strong for Rocket Lab. Per TipRanks, analysts within the past three months peg RKLB stock as a consensus “strong buy.” Further, their average price target lands at $9.81, implying nearly 30% upside potential.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
