Rocket Lab (RKLB) stock is firing on all cylinders, making it one of the best performing companies in Wall Street. It soared to a high of $8.96, its highest point since March 2022 and over 150% from its lowest level this year.
Other companies in the space industry are doing well this year as analysts predict more launches in the coming years. Intuitive Machines stock rose to $10, its highest level in over 12 months.
Rocket Lab is in a growing industry
The space industry is doing well as demand for small, medium, and large satellites rise. Data by Statista shows that the number of satellites in orbit has gone parabolic in the past few years. There were 2 of them in 1958, a figure that has jumped to over 9,200 today.
Elon Musk’s SpaceX has led the space race, with over 7,000 satellites in orbit. These satellites have helped the company become a leading player in the internet industry, where it provides internet to over 3 million customers.
Analysts expect that the number of these satellites will surge to over 60,000 by 2030. Other analysts shows that these satellites will be much higher.
Rocket Lab has emerged as one of the leading companies in the industry. It currently uses the Electron rocket, which is highly optimized for small payloads, which are more popular than the large ones.
Electron has become the second most frequently launched orbital rocket by firms in the United States and its market share will continue growing. Its key advantage is that it is less expensive than other rockets.
The company is now working on the Neutron rocket, which will focus on medium-weight payloads of about 15,000 kg. As such, when the Neutron rocket is complete, the company will be able to diversify its business and attract more customers.
Most importantly, unlike other companies in the industry that focus on the lower part of space, Rocket Lab is becoming an expert in deep space.
Read more: Avoid Virgin Galactic stock: buy Rocket Lab instead
Rocket Lab’s business is doing well
The most recent financial results showed that Rocket Lab was doing well as its revenue surged to a record high.
Its quarterly revenue rose to over $106.2 billion, a big increase from the $62 million it made in the same period last year. For the first six months of the year, its revenue rose from $116 million to $119 million.
However, as expected for a relatively young company, it continued losing money during the quarter. Its net loss came in at over $41 million an improvement from the $45 million it lost a year earlier. It narrowed its loss as its gross margins continued growing.
Rocket Lab expects that its business will continue growing this year. Its quarterly revenue for the third quarter will be between $100 million and $105 million. Most of this revenue will come from its space systems, which will make between $79 million and $84 million.
Rocket Lab’s revenue will always be different than other companies because of how its deals are structured. Some customers will come with just a few launches while others will have multi-year deals. In the longer-term, its annual revenue should continue growing as launches rise.
Analysts expect that its annual revenue will rise from $244 million in 2023 to over $423 million this year and $596 million next year. It will then cross the $1 billion mark in the next few years.
Rocket Lab ended the quarter with a backlog of $1.067 billion, with most of this being in the space systems division. $294 million of the backlog is in its launch business.
RKLB stock risks
Rocket Lab has numerous catalysts, as we have seen above. However, it also has some potential risks that could affect its stock. First, the launch business has some operational risks, meaning that delays are possible. All companies in the industry have gone through these issues.
The other risk is that Rocket Lab is still burning cash, meaning that the management may decide to raise additional capital, which will dilute its shareholders.
Additionally, competition in the industry is rising, with companies like SpaceX, United Launch Alliance, Intuitive Machines, and Relativity Space vying to take market share.
Rocket Lab stock price analysis
The weekly chart shows that the RKLB share price formed a strong bottom between $3 and $4. It formed a double-bottom pattern, which is a common bullish sign. It has now surged and crossed the neckline at $8.03, its highest point on June 17.
RKLB stock has also moved above the 23.6% Fibonacci Retracement point and the 50-week moving average. Therefore, there is a likelihood that it will continue soaring as bulls target the 50% Fibonacci Retracement point at $12.40, which is about 43% above the current level.
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