A delay in the launch of Rocket Labs’ Neutron triggered a 27% selloff, but the stock partially recovered.
The third quarter saw record revenues of $155 million, 17 Electron contracts and $1 billion in inventory.
Analyst consensus sees it as a moderate buy with a high price target, implying solid upside for investors.
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The rocket lab (NASDAQ:RKLB) had one of the most promising bull runs in 2025 – until an announcement sent shares tumbling more than 27% in a month.
Some investors consider Rocket Lab to be “SpaceX-lite”, noting that they operate in the same ring (reusable rockets) but in different weight classes (SpaceX mostly does medium to heavy launches and mega-constellations, while Rocket Lab focuses on small satellite launches).
Rocket Lab’s Neutron was set to change all that. The medium-lift rocket increases its payload mass to 13,000 kg for low-Earth orbit (LEO), making it a viable alternative for SpaceX’s medium-lift customers who don’t necessarily need the full Falcon 9 experience.
Image source: Getty Images.
However, according to third-quarter financials released Nov. 10, Rocket Lab has “upgraded” its neutron launch schedule from late 2025 to the first quarter of 2026.
And I get it — delays like this can spook investors and crush confidence in the market. However, for those types of declines, this downtrend actually presents a great entry opportunity for this growth stock. Here’s why.
First, let’s dive into the third quarter financials. Rocket Lab secured 17 Electron launch contracts in the third quarter alone, with the Electron being its low-lift rocket. For reference, Rocket Lab had just 12 electron launches in the entire nine-month period from 2024, right around this time last year. That shows massive scaling.
The company also reported an impressive 48% growth to a record $155 million. Gross margin (on a GAAP basis) also improved to 37%. It reported higher revenue and research and development costs for the quarter, though it was largely offset by certain tax benefits. As a result, net losses were lower at $0.03 per share.
CEO Sir Peter Beck also said the company has a “backlog of $1.05 billion”, indicating strong demand and a solid base for future revenue growth. In addition, it announced a new federal defense contract for the development of its Neutron rocket and Archimedes reusable engines with the US Air Force Research Laboratory.
Along with other previous deals with the US and UK, this demonstrates that Rocket Lab has an increasingly viable on-ramp to larger defense contracts.
As mentioned earlier, Rocket Lab announced a delay to the Neutron launch in its latest financials. And although the stock was already in a slight decline by Nov. 10, the announcement sent shares tumbling from about $52 to $39. That said, we’re already seeing some recovery, with Rocket Lab shares trading around $47 today.
However, at current prices, the stock trades at more than 36 times earnings (price-to-sales ratio). This is a premium — extremely high and prohibitive for some. However, this premium may be justified if Rocket Lab maintains its growth rate, especially if it turns a good portion of its backlog into recurring revenue. Fourth quarter revenue is already expected to be between $170 million and $180 million, representing significant sequential and year-over-year growth.
And finally, the company operates in a sector with a total potential addressable market of $10 billion by 2030. If it can capture and maintain a decent slice of that pie, we may be looking at a multi-billion dollar growth story in the making.
A consensus among 15 analysts rates Rocket Lab’s stock a moderate buy, with an average score of 4.13, up from 4.07 two months ago. That means despite the Neutron delay, Wall Street has a higher score for Rocket Lab, highlighting its strong upside potential despite near-term headwinds. The lofty price target is $83, which suggests a potential upside for the stock of around 77% over the next year.
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Rick Orford has no position in any of the stocks mentioned. The Motley Fool has positions and recommends Rocket Lab. The Motley Fool has a disclosure policy.
1 Growth Stock Down 27% to Buy Right Now was originally published by The Motley Fool
