Why Rocket Lab Stock Keeps Going Up
Rocket Lab's stock has surged for ten consecutive days, rising 5.7% after announcing new rocket launch contracts with Japan's JAXA. The company plans to launch two rockets in 2025 and 2026, contributing to its goal of 20+ launches this year. Despite the growth in launch cadence, the low-margin nature of the business raises concerns about long-term profitability. Investors are currently rewarding Rocket Lab's performance, but the stock's high valuation suggests potential volatility ahead.
Rocket Lab (RKLB 2.80%) stock rocketed to a 10th straight day of gains Friday, surging 5.7% through 11:15 a.m. ET after announcing the New Zealand-based space company announced yet another big rocket launch contract.
And once again, it's with near-neighbor Japan.
Image created by JesterAI.
Rocket Lab + JAXA: Better together
Hard on the heels of Wednesday's announcement of a three-rocket series of launches for Japan's iQPS, Rocket lab announced today that it will launch two more rockets for the Japan Aerospace Exploration Agency (JAXA, Japan's version of NASA).
Both launches will use Rocket Lab's workhorse Electron small rocket. Both will launch out of the company's original Launch Complex 1 in New Zealand. The first launch, scheduled for December 2025, will put JAXA's "RApid Innovative payload demonstration SatellitE-4 (RAISE-4) spacecraft" in orbit in a tech demonstration mission.
The second, launching sometime in 2026, will orbit eight tiny satellites conducting educational, ocean monitoring, antenna unfurling, and "ultra-small multispectral cameras" missions.
Is Rocket Lab stock a buy?
The first JAXA mission will move Rocket Lab one step closer to its goal of hitting "20+ launches" this year, so at least 25% growth in launch cadence compared to 2024, and potentially almost 100% growth.
Rocket Lab's doing a great job of growing its launch cadence, but launches are widely understood to be a pretty low-margin business. They're unlikely to turn Rocket Lab fabulously profitable on their own. While investors are richly rewarding Rocket Lab for the cadence improvement, the share price of now 52 times trailing sales passed into "irrational exuberance" territory long ago.
Rocket Lab has become a momentum stock. It's going up a lot today -- but it could come down twice as fast tomorrow.
