Rocket Lab 2025 Forecast: Is RKLB Stock a Good Long-Term Investment?

Rocket Lab stock has risen sharply after the earnings release. What’s the 2025 forecast for RKLB stock and is it a good long-term investment?

Mohit Oberoi, CFA - Author

Sep. 10 2021, Published 9:52 a.m. ET

Rocket Lab (RKLB), which listed in August through a reverse merger with Vector Acquisition (VACQ), soared over 37 percent on Sept. 9 and hit a new 52-week high. It’s a welcome break for investors. Most of the companies that went public through a SPAC merger trade way below the pre-merger highs. What’s the 2025 forecast for RKLB stock and is it a good long-term investment?

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There's a long list of SPACs that trade below the $10 price level. Also, many of the companies have seen a sell-off after posting their earnings after the merger. As for Rocket Lab, the opposite happened and it rose sharply after posting its first earnings as a publicly traded company.

Rocket Lab earnings

Rocket Lab reported revenues of $29.5 million in the first half of 2021, which was 237 percent higher than the same period in 2020. The company’s order backlog also increased 136 percent during the period to $141.4 million. Its gross margins improved to 13 percent compared to negative gross margins of 67 percent in the first half of 2020.

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Rocket Lab and Kinéis deal

Rocket Lab also announced a multi-launch deal with Kinéis under which RLKB will deploy “25 Internet-of-Things (IoT) satellites across five dedicated missions on the Electron launch vehicle.” The satellite launches will commence in the second quarter of 2023.

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Why Rocket Lab looks like a good investment

Rocket Lab is an end-to-end space company. It's a rare commercial company in the U.S. that has delivered regular access to the orbit. It has integrated operations and has the ability to produce one rocket every week.

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Rocket Lab stock forecast for 2025

Rocket Lab expects to post revenues of $749 million in 2025 and expects its adjusted EBITDA to rise to $119 million in that year. Currently, RKLB has a market cap of around $9.2 billion, which gives us a 2025 price-to-sales multiple of around 12.3x. The company’s valuation multiples have expanded since the listing.

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Before the listing, I noted that the outlook for RKLB stock looked positive and that it should go up after the merger. The stock has risen sharply since then. The valuations have started to look a bit frothy now even though the long-term outlook for Rocket Lab stock looks intact.

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RKLB stock long term forecast

The total addressable market for the satellite launches and space application and system market currently stands at $350 billion. Rocket Lab estimates that the market will grow to $1.4 trillion by the end of this decade. This would be a significant revenue opportunity for companies in the industry, and Rocket Lab also has a first-mover advantage as well as several partnerships under its belt.

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Rocket Lab’s Electron is the only reusable orbital-class small rocket. The company’s Photon spacecraft platform would support NASA’s missions to Mars and Moon. The platform would also support the first private commercial mission to Venus.

However, it would be prudent to wait for the stock to come down somewhat from these levels. RKLB stock was incidentally trading lower in the early price action on Sept. 10. If the stock comes down a bit more from these levels, it could be an attractive entry point into Rocket lab stock.


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