Rocket Lab (RKLB) Valuation in Focus After Launch Complex 3 Debut for Neutron at Virginia Spaceport

If you’ve been following Rocket Lab (NasdaqCM:RKLB), you know the company just pulled off a major move with the official opening of Launch Complex 3 in Virginia. This new, dedicated test, launch, and landing facility is built specifically for Neutron, Rocket Lab’s next-generation, reusable medium-lift rocket. For investors, this is more than just ribbon-cutting; it is a sign that Rocket Lab is getting ready to compete more seriously in a high-stakes market that demands reliability and quick turnaround for launches.

The opening of Launch Complex 3 adds fuel to a string of expansion moves for Rocket Lab this year, from boosted space-grade semiconductor investment (with significant federal backing) to ongoing work on its growing launch infrastructure. Steadily, the stock has been on the move as well, rising about 80% over the past 3 months and up 7% for the year. This kind of momentum reflects a shift in sentiment, where investors may be revisiting assumptions about Rocket Lab’s growth prospects and risk profile, all against a backdrop of rapid development and new revenue opportunities.

With the pace picking up and ambitious new projects underway, is Rocket Lab’s potential still underappreciated by the market, or has this latest rally already priced in most of its prospects?

Most Popular Narrative: 53.2% Overvalued

The narrative from KiwiInvest suggests Rocket Lab is significantly overvalued based on projected growth and future profitability.

The global 'space economy' is forecasted to be worth approximately $1.8 trillion by 2035. Roughly $800 billion is estimated to consist of "backbone" business, such as satellites and rockets, and the services or software required to enable them, such as internet and positioning technologies. The remaining $1 trillion is estimated to be made up of businesses that operate on top of that backbone. For example, super-accurate position tracking enables faster package delivery or even autonomous drone delivery. Higher quality and cheaper satellite photography enables farmers to inspect their crops from satellite images and compare growth between paddocks from the office rather than traveling around the farm all day.

What bold assumptions power this dramatic overvaluation? The narrative is built on fast-rising revenue, ambitious margin targets, and a profit forecast that would turn heads in any industry. Interested in the real numbers and the key drivers behind the valuation? Dive in to uncover what could separate today's price from tomorrow's reality.

Result: Fair Value of $31.72 (OVERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, unexpected setbacks with Neutron launches or increased government contract competition could quickly test these optimistic assumptions and shift the market’s outlook on Rocket Lab.

Find out about the key risks to this Rocket Lab narrative.

Another View: What Does Our DCF Model Say?

While market multiples point to Rocket Lab looking pricey, our DCF model offers another perspective and suggests the stock is also overvalued. Could these methods be missing a crucial catalyst or change ahead?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Rocket Lab for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own Rocket Lab Narrative

If you see things differently or you're keen to dig into the details yourself, you can craft your own view with just a few clicks: Do it your way

A good starting point is our analysis highlighting 1 key reward investors are optimistic about regarding Rocket Lab.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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