Rocket Lab (RKLB -11.65%) has taken investors on quite a roller coaster ride since its public debut, but the recent trajectory has been strong. In fact, if you had invested $10,000 in the stock three years ago, you’d have more than $92,500 today.
There are some good reasons for this stellar performance. For one thing, to call its Electron rocket a success would be an understatement. The company has launched 70 of these rockets, and with fantastic reliability. As a result of the Electron rocket’s success, revenue has soared. Rocket Lab reported a 78% year-over-year revenue increase in 2024, and 2025 is shaping up to be another excellent year for growth.
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In addition, there’s also tremendous upside potential from the upcoming Neutron rocket, which can carry much higher payloads than the Electron (and therefore generate more revenue). The current timetable calls for a Neutron mission as early as next year, and the successful track record of the Electron is causing lots of investor optimism.
Could Rocket Lab have more room to climb?
To be sure, Rocket Lab is not a cheap stock. It trades for more than 45 times trailing-12-month revenue and is a long way off from profitability, even under the most optimistic estimates.
However, the potential of the space economy is absolutely enormous. According to research from McKinsey & Company, the space economy will be $1.8 trillion in size by 2035 — roughly triple today’s size, with commercial (non-government) companies expected to drive most of the growth.
One near-term story to keep an eye on is the upcoming test of the Neutron rocket, which is expected to happen before the end of the year. A successful test could be a massive catalyst for the stock, signaling to investors that a new surge in revenue growth is on the horizon.
Matt Frankel has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Rocket Lab. The Motley Fool has a disclosure policy.
