We came across a bullish thesis on Rocket Lab USA, Inc. (RKLB) on Substack by Steve Wagner. In this article, we will summarize the bulls’ thesis on RKLB. Rocket Lab USA, Inc. (RKLB)’s share was trading at $20.51 as of May 9th.
A rocket launching into the night sky, carrying a satellite payload.
Rocket Lab (RKLB) began 2025 with strong operational momentum, delivering a robust first quarter that underscored its strategic execution and scaling capabilities. The company reported $122.6 million in revenue, a 32% year-over-year increase, driven by five successful Electron launches and continued growth in its high-margin Space Systems segment. Notably, RKLB’s total backlog swelled to over $1.07 billion, providing clear revenue visibility and underlining customer confidence in its expanding portfolio. The Electron launch cadence accelerated, with three launches in just 13 days, further establishing Electron as the most frequently flown small orbital launcher and the second most-launched U.S. rocket after SpaceX. This performance affirms RKLB’s reliability and responsiveness in the small launch market. Meanwhile, the HASTE variant of Electron gained traction in hypersonic testing, securing contracts with the U.S. Department of Defense and the UK Ministry of Defence, positioning Rocket Lab as a key defense partner in this growing niche.
While launch operations garnered headlines, it was the Space Systems division that stole the show, contributing 71% of total revenue. This segment, which includes satellite components, full spacecraft builds, and mission operations, has become RKLB’s financial engine. The company showcased its operational prowess with the rapid turnaround of customer Varda’s spacecraft, exemplifying the benefits of its vertically integrated model. Of the $1.07 billion backlog, $645 million is tied to Space Systems, reflecting the division’s importance and long-term growth trajectory. To further bolster this segment, Rocket Lab announced its planned acquisition of Mynaric, a German manufacturer of laser optical communications hardware. This move will expand RKLB’s offerings into high-speed, space-based data transmission and strengthen its position in both government and commercial markets. The addition complements other recent product launches, such as new solar arrays and radios, making Rocket Lab a more comprehensive satellite solutions provider.
Looking ahead, much attention is focused on Neutron, RKLB’s next-generation reusable rocket targeting a first launch in the second half of 2025. The program gained credibility by being included in the U.S. Space Force’s $5.6 billion NSSL Phase 3 program, even before its first flight—a major validation of its technical potential. The first Neutron contract, with the U.S. Air Force, signals early customer interest. Financially, RKLB reported an adjusted EBITDA loss of $30 million due to elevated R&D costs, especially around Neutron and Photon programs. Yet with $428 million in liquidity, the company has a strong cash runway to fund near-term milestones. Despite short-term losses, RKLB’s growing backlog, diversified revenue, and strategic positioning in launch, space systems, and defense make it a compelling long-term investment opportunity.
Rocket Lab USA, Inc. (RKLB) is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 37 hedge fund portfolios held RKLB at the end of the fourth quarter which was 16 in the previous quarter. While we acknowledge the risk and potential of RKLB as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than RKLB but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article was originally published at Insider Monkey.
