Rocket Lab Valuation Weakens After SpaceX Surge

Rocket Lab  valuation has become stretched despite continued execution at a high level, delivering strong revenue growth, expanding its backlog, and steadily building a vertically integrated space and defense platform. After shares surged 43% since my previous report, I believe valuation has become disconnected from the company’s underlying risk-reward profile. While the anticipated SpaceX IPO could continue to support sentiment for the sector, I believe Rocket Lab should be valued on its own fundamentals rather than expectations of a broader space stock rerating.

Rocket Lab Continues To Execute

First-quarter revenue increased 63.5% to $200.3 million, while backlog expanded from $1.85 billion to $2.2 billion. The company also secured contracts for five Neutron launches and a block of 20 HASTE launches, supporting future growth. Gross margins expanded to 43% as the business scaled across launch and space systems activities.

What continues to impress me is Rocket Lab’s strategy. Through acquisitions and internal development, the company has added optical payloads, laser communications, robotics, precision mechanisms, electric propulsion, and solar technologies, creating a deeper vertically integrated platform.

Valuation Has Become The Problem

The challenge is no longer execution. The challenge is the Rocket Lab valuation. Even when applying valuation frameworks that assume SpaceX-like multiples, upside appears limited. At the same time, investors face execution risk around Neutron and uncertainty regarding how the eventual SpaceX IPO will impact space sector valuations.

Conclusion

Rocket Lab remains one of the most impressive companies in the space sector. However, after a significant rerating, I believe profit-taking is justified and am downgrading the shares from Buy to Sell on Rocket Lab valuation concerns.