Rocket Lab (RKLB) Valuation in Focus as U.S. Expansion and Tech Milestones Signal Next Phase of Growth

If you’re holding shares of Rocket Lab (RKLB) or considering a move, the latest announcement is worth a closer look. The company is significantly expanding its U.S. manufacturing capabilities for space-grade semiconductors and solar cells, backed by a $23.9 million award from the Department of Commerce under the CHIPS and Science Act. This decision is not just about scaling up production; it is a direct response to national security priorities and supply chain needs, especially as demand grows for advanced components in satellite and defense technology. In addition, Rocket Lab’s acquisition of Geost signals a push to broaden its presence in electro-optical payloads, an area closely tied to both commercial and government satellite missions. This wave of expansion comes as Rocket Lab continues to achieve operational milestones. Over the past year, shares are up about 6%, and over the past three months there has been a strong rebound of more than 54%. This momentum stands out among competitive aerospace peers. Recent rapid Electron launches, along with progress on the upcoming, reusable Neutron rocket, have kept the spotlight on Rocket Lab’s ability to execute at scale while addressing shifting industry priorities. All these developments contribute to the company’s evolution from focusing solely on launch services to becoming a broader, more integrated space systems provider. The question for investors now is whether this surge in industrial and strategic capacity means the stock is undervalued, or if the market has already accounted for much of Rocket Lab’s next phase of growth.

Most Popular Narrative: 39.9% Overvalued

According to the narrative by KiwiInvest, Rocket Lab shares are considered significantly overvalued compared to their calculated fair value, discounting future growth and profitability targets at a rate of 8%.

Rocket Lab has achieved revenue of $436 million through 16 annual launches of its Electron rocket, along with its rapidly expanding 'Space Systems' segment. Roughly one-third of revenue comes from its low-cost rocket launches, with the remaining two-thirds generated by selling the satellites used in those launches to its customers. To achieve $6 billion in revenue by 2035, Rocket Lab must get its newest rocket, Neutron, operating in a similar low-cost manner to fend off competition, while maintaining high reliability to capture more of the faster growing and higher margin Space Systems segment.

Curious how Rocket Lab’s ambitious journey to multi-billion dollar revenues shapes this bold valuation? The narrative relies on aggressive growth projections and targets margins that rival industry leaders. Wondering which numbers could justify such a leap? The full breakdown offers rare insight into Rocket Lab’s possible future position in the industry and what it could mean for current investors.

Result: Fair Value of $31.72 (OVERVALUED)

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

However, setbacks in Neutron's launch timeline or persistent challenges in achieving positive margins could quickly change investor sentiment regarding Rocket Lab's growth story.

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

Another View: SWS DCF Model

Taking a step back from multiples, our SWS DCF model paints a similar picture. The model indicates Rocket Lab’s shares are above fair value, even when using projected future cash flows. Could market optimism be running ahead of reality?

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 want to dig into the numbers yourself, you can easily create your own perspective in just a few minutes, so why not do it your way?

A great starting point for your Rocket Lab research is our analysis highlighting 1 key reward and 1 important warning sign that could impact your investment decision.

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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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