During the October 1 episode of Mad Money, Jim Cramer discussed Rocket Lab Corporation (NASDAQ:RKLB) while reviewing the Nasdaq 100’s third-quarter performance. He pointed investors toward Space Exploration Technologies Corp. (NASDAQ:SPCX), better known as SpaceX, as he said:
Alright, what about the Nasdaq 100, which finished up 2.47%?… Losers… There’s Rocket Lab, off 31%. Some delays, some dilution, lower margins, can even bring down rocket stocks. You want rockets? SpaceX.
Both of the stocks could possibly go to the moon according to Reddit.
Rocket Lab Is Still Winning Business
Rocket Lab Corporation reported second-quarter revenue of approximately $234 million, up 62% year-over-year, and a backlog of $2.36 billion. Management projected third-quarter revenue of $250 million – $265 million. Those figures show continued business expansion despite the stock’s decline. On September 30, it announced an agreement with Synspective for 20 additional Electron missions, its largest commercial Electron launch contract. The agreement brings Synspective’s total contracted Electron missions to 47, which is another example of repeat demand from an established customer.
Space Exploration Technologies Corp. operates on a much larger scale, with businesses extending beyond launches into connectivity and artificial intelligence. Second-quarter revenue increased 92% to approximately $7.8 billion, while adjusted EBITDA reached $3.5 billion. Connectivity revenue grew 66%, supported by a doubling of Starlink subscribers and expansion in enterprise and government business. It ended June with approximately $100 billion in cash, cash equivalents and marketable securities. In September, Cramer explained why SpaceX was his new fantasy flex player.
Growth Has Not Removed the Financial Risks
Rocket Lab Corporation continues to face development and profitability challenges. Its August update targeted delivery of Neutron to the launch pad in the fourth quarter, which is distinct from a completed launch. Third-quarter guidance also included an adjusted EBITDA loss of $17 million – $23 million and GAAP gross margin of 29% – 31%.
Space Exploration Technologies Corp.’s size does not make it a conventional profitable aerospace investment. The company reported a second-quarter net loss of $541 million. Its AI segment alone incurred approximately $15.83 billion in capital expenditures during the quarter and recorded an operating loss of approximately $1.26 billion. Investors buying the shares are funding a broader and more capital-intensive business than the launch operation alone.
Valuation adds another distinction. Data shows enterprise-value-to-trailing-sales multiples of approximately 55x for Rocket Lab and 91x for SpaceX. Neither had a meaningful trailing earnings multiple. These are substantial revenue valuations, and SpaceX’s larger operating footprint does not translate into a lower trailing sales multiple. Rocket Lab received a bullish call in September as Raymond James identified two “significant upside” potential for the company.
SpaceX Draws Funds While Rocket Lab Loses Some Holders
Insider Monkey’s database showed 119 hedge funds holding SpaceX in the second quarter. A comparable first-quarter count is unavailable because its shares began trading in June. Rocket Lab appeared in 99 portfolios, down from 112. Reported short interest was 2.43% of SpaceX’s float and 6.45% of Rocket Lab’s, indicating a larger relative short position in Rocket Lab.
Cramer prefers Space Exploration Technologies Corp., but the financial comparison is less straightforward than choosing the larger rocket company. Rocket Lab Corporation continues to secure launch orders while developing Neutron. SpaceX brings a much broader revenue base and substantial liquidity, but also heavy AI spending. Both stocks require investors to look well beyond current earnings to justify their valuations.
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