Upcoming Plans for Rocket Lab USA in 2025: Insights Revealed
The hype around space exploration is reaching new heights these days. Companies like Elon Musk's SpaceX and Jeff Bezos' Blue Origin are spearheading this change, turning what was once a government-dominated field into a private sector-led venture.
This shift in the industry has excited investors, who are looking for chances in the booming space sector. While SpaceX has been a hot topic, the company isn't planning a public stock offering anytime soon. However, there's one competitor you can invest in right now: Rocket Lab USA (RKLB -4.29%).
Rocket Lab took off in 2024, surging 409% as it stepped up its launch frequency. Looking at 2025, the company is looking to expand its profit margins. Here's why:
Electron is a top choice for small satellite launches
Rocket Lab has become a go-to partner for companies launching small satellites into orbit. With its leading rocket, the Electron, the company has established itself as a top player in the industry and has the second-most-used orbital rocket in the U.S. Electron's compact size makes it perfect for frequent and affordable missions for clients with light payloads. Since its launch in 2017, Rocket Lab has completed 57 missions, including 15 in 2024.
Rocket Lab faces competition from SpaceX's Falcon launch vehicle, but it's clear that SpaceX has a large market share, with 98 launches, or 90% of the total launches by U.S.-based companies in 2023.
Financially, Rocket Lab USA is growing steadily. In 2024, the company generated an impressive $304 million in revenue and $79 million in gross profit, thanks in part to its launch service business.
But that's not all. In addition to its launch services, Rocket Lab has a lively space systems business providing design and manufacturing services for spacecraft components. This division alone contributed $220 million to revenue, accounting for 72% of its total gross profit through three quarters in 2024.
The Outlook for 2025
One limitation for Rocket Lab is its smaller Electron rocket. While this means more frequent flights, the company earns less per launch. A typical Electron launch brings in around $7.5 million. Rocket Lab is also limited in handling more lucrative civil and defense payloads, giving competitors like SpaceX a significant edge.
However, Rocket Lab has plans to introduce its Neutron rocket, which it's been developing since 2021, in 2025. With a payload capacity of 13,000 kilograms, 60 times more than its Electron rocket, Neutron will better position Rocket Lab to take on SpaceX's Falcon 9 launch vehicle head-to-head.
Neutron will yield revenue and profit six times greater than Electron, paving the way for strong growth and expanding margins.
Lately, Rocket Lab made headlines for successfully testing its Archimedes engine at NASA's Stennis Space Center. This engine will power the first stage of its Neutron rocket, and the test confirmed its design and proved its operability. Rocket Lab CEO Peter Beck believes this success keeps the company on track for a mid-2025 launch of the Neutron rocket.
Analysts estimate that Rocket Lab will generate $596 million in 2025, representing a remarkable 40% growth from this year's projected revenue. The company is expected to reduce losses from $186 million in 2024 to $145 million in 2025, with earnings projected to turn positive by 2027.
Is Rocket Lab right for you?
Rocket Lab is making great progress and is scheduled for a mid-2025 launch of its Neutron vehicle, which is good news for investors. The company also boasts a substantial backlog of $1.05 billion, representing contracts for future launch services and space systems work. This is up 80% from 2023 and highlights strong demand for Rocket Lab's services.
However, any obstacles in the Neutron vehicle development could potentially delay profitability goals.
Rocket Lab stock has appreciated significantly in 2024 and is currently valued at 23 times projected sales for the upcoming year. Due to its high valuation and volatility, Rocket Lab might not be the best choice for conservative investors focusing on capital preservation.
Nevertheless, Rocket Lab presents an intriguing investment opportunity for investors with a higher risk tolerance who are seeking long-term growth potential. Just remember the volatility and lack of current profits, and consider investing in Rocket Lab over time as it meets its long-term objectives.
Investors interested in the space sector might find Rocket Lab USA appealing due to its strong financial performance and growth potential. In 2024, the company generated $304 million in revenue and $79 million in gross profit, mainly from its launch service business.
Given the anticipated launch of Rocket Lab's Neutron rocket in mid-2025, which is expected to yield revenue and profit six times greater than the Electron rocket, this could further expand its profit margins and make it a more compelling investment opportunity for those with a higher risk tolerance seeking long-term growth potential.
