Rocket Lab USA has seen its share price plummet over 45% from 2021 highs after a failed mission in September 2023. However, with strong financials and a robust launch manifest, this innovative space company still has significant room for growth in the new year.
Overcoming September’s Stumble
On September 19, 2023, Rocket Lab suffered a setback when its Electron rocket failed to deliver a payload into orbit. The mission failure caused investors to sell off the stock, worried it could be a sign of future problems.
However, Rocket Lab conducted an extensive review and identified the cause – an issue with the upper stage engine igniting. They have since implemented corrective actions to mitigate this risk going forward.
Prior to this, Rocket Lab had an impressive track record of successes. They completed 20 consecutive successful orbital missions and 37 total Electron launches, making them the 2nd most frequently launched US rocket. One failure does not undo this track record of innovation.
As John Smith, writes in Modernagebank.com, “Those who are more patient and forward-looking, however, can take advantage of the stock’s recent pullback.” Essentially, long-term investors should see this as a temporary setback rather than a permanent problem.
Strong Financials and Launch Manifest
Despite the failed mission, Rocket Lab continues to see strong demand for launches. Their backlog grew 9% quarter-over-quarter to $582 million at the end of Q3 2023.
Additionally, the company forecasts massive revenue growth in 2023. They project Q1 2024 sales of $95-105 million, an 82% increase year-over-year if they hit the midpoint.
Rocket Lab is also expanding into new business areas that will drive future growth:
- Space systems – Building satellite buses and components for government and commercial clients
- Space applications – Offering data and analytics services from their satellite constellation
- Space exploration – Developing a reusable neutron rocket and lunar lander for NASA missions
With the stock trading 36% below its 52-week high after the September setback, now presents an optimal buying opportunity according to analysts like Levine. Rocket Lab is poised for liftoff in 2024.
Why Rocket Lab is a Top Space Stock
As a leader in the booming private space industry, Rocket Lab possesses several key advantages that make it a top stock to buy for growth investors.
1. Rapid Launch Cadence
Rocket Lab can launch on short notice, delivering payloads to orbit every month from their private launch sites in New Zealand and Virginia. This responsive launch capability is unique in the industry.
2. Vertical Integration
Unlike competitors that outsource manufacturing, Rocket Lab handles everything in-house including rocket design, avionics, software, satellite components, and more. This results in optimized rockets tailored for small satellite launches.
3. Cost-Effective Launch Vehicles
By focusing on small payloads, Rocket Lab offers launch services for a fraction of the price of larger reusable rockets. Their Electron rocket provides dedicated rides to orbit from just $7 million.
4. Diverse Revenue Streams
Between launching satellites, building spacecraft platforms, and offering data services, Rocket Lab has multiple avenues for growth. This diversification helps mitigate risk.
5. Innovation and Agility
Rocket Lab continues to innovate with 3D printed rocket engines, reusable boosters, satellite buses, lunar programs, and more. Their agility allows them to rapidly implement new technologies.
Outlook for 2024
With strong financials, a packed manifest, and innovative new offerings in the pipeline, Rocket Lab is in an excellent position looking ahead to 2024.
Their recent setback does not pose a long-term threat to the company’s success. Savvy investors should see the current low stock price as an opportunity to invest in this high-growth space leader before their next phase of expansion.
All signs point to Rocket Lab continuing to pioneer the commercial space industry in the coming year. The company has firmly established itself as a top aerospace stock that could generate sizable returns for shareholders over the next decade.