Rocket Lab's share price experienced a significant surge of over 40% during Wednesday's morning trading session.
Rocket Lab's share price experienced a significant surge of over 40% during Wednesday's morning trading session.
Rocket Lab (RKLB) saw a 44% surge in its shares at 10:45 a.m. ET on Wednesday, following an optimistic Q3 earnings report on Tuesday night.
Analysts had anticipated Rocket Lab to post a loss of $0.11 per share on quarterly sales of $102.3 million. However, the company surprised everyone by reporting sales of $104.8 million and a loss of just $0.10 per share.
Rocket Lab Q3 Financial Performance
Rocket Lab's revenue saw a significant increase of 55%. Regrettably, losses also rose, up by 25% from $0.08 per share a year ago. Nonetheless, if we analyze the financial performance over a broader perspective, we observe that the year-to-date losses are merely $0.28 per share. This figure is quite similar to the losses recorded in the same period last year.
What truly grabbed investors' attention was not the current losses, but the company's progress towards future profitability. Wall Street analysts expect Rocket Lab to remain unprofitable until 2027. Thus, the Q3 losses were not unexpected. Instead, investors were keen to see signs of progress towards eventual profitability, which Rocket Lab indeed delivered.
Rocket Lab announced $55 million worth of new Electron launch contracts during Q3, more than enough to cover the quarterly launch revenue. The company forecasted Q4 revenue to range between $125 million and $135 million, indicating a minimum doubling of revenues compared to the Q4 of the previous year's $60 million. Moreover, Rocket Lab hinted at even more revenue in the future by securing an undisclosed customer for multiple launches on its new Neutron medium-lift vehicle.
Intriguingly, this undisclosed customer plans to utilize the Neutron rocket to deploy its entire satellite constellation.
In essence, SpaceX should brace itself, as Rocket Lab is eyeing its prime market.
Is Rocket Lab Stock a Smart Investment?
Considering Rocket Lab is currently valued at 22 times sales and an infinite multiple of earnings, it's challenging to justify its share price based on valuation. Nevertheless, Rocket Lab is currently viewed as a growth stock by investors. As long as Rocket Lab continues to grow, its share price is expected to outperform.
Given Rocket Lab's impressive Q3 financial performance, with revenue increase and new launch contracts securing future revenues, some investors might consider investing more in the company's finance. The company's focus on developing the Neutron medium-lift vehicle and securing a significant customer could potentially lead to substantial returns in the investing world.