Is Rocket Lab USA Stock a Buy Now?

Rocket Lab USA Inc. (RKLB) has been a hot topic in the aerospace and defense industry, with its stock price soaring in recent years. However, the company's financial performance has been volatile, with losses and negative margins raising concerns among investors. As of February 22, 2025, Rocket Lab's stock price was $23.55, down from its 52-week high of $31.29. But is it still a buy now? Let's dive into the company's financials and expert opinions to make an informed decision.



Financial Performance

Rocket Lab's revenue has been growing consistently, with a 15.92% increase in 2023 compared to the previous year. However, the company has been reporting losses, with a 34.3% increase in losses in 2023 compared to 2022. Rocket Lab's gross margin has been fluctuating but has shown signs of improvement, reaching 26.06% in 2023. Its operating margin has been negative, with an improvement to -51.16% in 2023 from -72.74% in 2022. The company's free cash flow margin has also been negative, with an improvement to -39.77% in 2023 from -62.79% in 2022.



Valuation and Analyst Ratings

Rocket Lab's stock price has been volatile, with a significant increase in 2024 followed by a decline in 2025. Some analysts have expressed concerns about the company's valuation, with a few suggesting that the current price may be unsustainable given the company's mounting losses. According to 12 analysts, the average rating for RKLB stock is "Buy," with a 12-month stock price forecast of $21.25, which is a decrease of -9.77% from the latest price.

Risks and Challenges

Rocket Lab faces several primary risks and challenges that could impact its financial performance and stock price in the short and long term. These include launch failures and delays, technological challenges, regulatory and geopolitical risks, revenue concentration, high debt levels, and valuation concerns. To mitigate these risks and challenges, Rocket Lab should focus on diversifying its customer base, improving its operational efficiency, and maintaining a strong pipeline of launch contracts. Additionally, the company should continue to invest in research and development to stay ahead of technological advancements and maintain its competitive edge in the space industry.

Expert Opinions

Despite the concerns about Rocket Lab's financial performance and valuation, some experts remain bullish on the company's long-term prospects. For instance, in a note out on February 22, 2025, Philip Gibbs of Keybanc Capital Markets upgraded Rocket Lab's stock to a "Buy" rating, with a price target of $32. Gibbs argued that the company's recent launch successes and strong backlog of missions would drive revenue growth and improve profitability. Similarly, Jason Gursky of Citigroup maintained a "Strong Buy" rating on Rocket Lab's stock, with a price target of $35.



Conclusion

Rocket Lab's financial performance has been volatile, with losses and negative margins raising concerns among investors. However, the company's revenue growth and strong backlog of missions have led some experts to maintain a bullish outlook on the stock. While Rocket Lab faces several risks and challenges, addressing these issues and maintaining a strong pipeline of launch contracts could enhance the company's financial performance and stock price in the short and long term. As of February 22, 2025, Rocket Lab's stock price was $23.55, down from its 52-week high of $31.29. Given the company's recent launch successes and strong backlog of missions, it may be a good time to consider buying Rocket Lab's stock, but investors should remain cautious and monitor the company's progress closely.