The recent market rotation toward smaller companies has lifted many boats, but Rocket Lab USA's (RKLB -4.29%) performance stands out even in this environment. The space company's shares have rocketed 320% higher this year at the time of this writing, including a stunning 107% surge in the past 30 days alone. This momentum has pushed Rocket Lab's market capitalization above $11 billion, and the stock now trades 24% above Wall Street's consensus price target.
Despite this meteoric rise, I'm keeping my position intact. Here's why this space stock might still have room to run.
Image source: Getty Images.
Executing on multiple fronts
Rocket Lab's third-quarter 2024 results demonstrate the company isn't just riding market sentiment. Revenue grew 55% year over year to $105 million, while the company's backlog reached $1.05 billion. More importantly, its Electron rocket achieved a new annual launch record with 12 missions year to date, making it the world's third most frequently launched rocket by vehicle type and the U.S.' second most active launch vehicle.
The company's launch business is also showing impressive pricing power. New Electron contracts signed in Q3 2024 averaged $8.4 million per launch -- a 67% increase from the rocket's debut pricing. This pricing strength and increased launch frequency suggest improving economics in the company's core business.
Beyond rockets to full-stack space
While many know Rocket Lab for its launch services, the company has quietly built a comprehensive space-systems business. Recent wins include a $23.9 million award from the U.S. Department of Commerce to expand semiconductor manufacturing capabilities for space-grade solar cells. Operating from its Albuquerque facility for 25 years, this division employs over 370 people and has delivered more than four megawatts of power to over 1,100 satellites in orbit.
The space-systems division continues gaining momentum. Recent highlights include delivering two spacecraft for NASA's ESCAPADE Mars mission, building return capsules for Varda Space Industries, and executing on a $515 million contract to construct 18 spacecraft for the Space Development Agency.
Neutron rocket expands possibilities
Rocket Lab isn't resting on its Electron success. The company's next-generation Neutron rocket development is progressing rapidly, with doubled engine testing cadence and completed construction of its Assembly, Integration, and Test facility in Virginia. This positions Rocket Lab to compete for the U.S. Space Force's National Security Space Launch program, a five-year contract valued at $5.6 billion.
A massive market opportunity
According to recent industry analysis, the global space economy is projected to reach $1.8 trillion by 2035, up from $630 billion in 2023. This growth extends far beyond traditional space applications. Reach applications -- where space technology enables broader business opportunities -- are transforming industries from transportation to climate monitoring. Even everyday services like ride-sharing apps depend on satellite technology for precise positioning.
Rocket Lab's vertically integrated approach, spanning launch services, spacecraft manufacturing, and critical components, positions it to capture value across this expanding ecosystem. The company's solar cells already power critical missions from early missile warning systems to NASA's Artemis lunar explorations and the James Webb Space Telescope. This deep integration into commercial and government space infrastructure creates multiple paths for long-term growth.
Maintaining conviction amid the rally
While Rocket Lab's 320% gain might typically trigger profit-taking, the combination of strong execution, expanding capabilities, and massive market opportunity suggests this could be a story worth seeing through. The company's growth in launch pricing power, critical infrastructure investments, and deepening relationships with government customers indicates strengthening competitive advantages.
The space economy's transformation from government-dominated to commercially driven creates opportunities for well-positioned companies to capture sustained growth. Early leaders in previous technological revolutions often delivered returns far beyond their initial breakouts. For investors who can tolerate the inevitable volatility, Rocket Lab's unique position in this secular growth story might justify maintaining exposure even after such impressive gains.
