Rocket Lab is the Right Stock for the Right Time Rocket Lab stock is up more than 40% after a strong earnings report; the rally may not be sustainable but the ongoing space race makes RKLB stock a buy

Rocket Lab USA Inc. (NASDAQ: RKLB) stock is up more than 40% the day after reporting a record number of launches for its Electron rockets in the prior quarter. The Electron rocket provides launch services that allows commercial and government customers to deploy satellites and other payloads into space.

For the quarter ending October 31, 2024, the company conducted 12 launches, which helped fuel its total revenue of $104.8 million, which beat analysts' expectations of $102.7 million.

The company also announced $55 million in new contracts, which increased its backlog to $1.05 billion. The company also increased its revenue guidance for the fourth quarter to a range of $125 to $135 million, which would be another record number.

Another positive takeaway from the earnings report was Rocket Lab's update on demand for its Neutron rocket. The company says it has signed an agreement for multiple launches in 2026 and is still on track to conduct the first test launches for Neutron in late 2025.

The Neutron rocket is a reusable launch rocket that can deploy medium-size payloads of up to 13,000 kg into low Earth orbit.

The Space Race is Accelerating

RKLB stock was already up 9% since the relief rally started after the U.S. presidential election. The solid earnings report is further evidence that even though the stock is up more than 250% in the last six months, it's just getting started.

That's because the United States is entering a new space race. That means there will be billions of dollars flowing into aerospace stocks from the public and private sectors. And Rocket Lab is well positioned to capture its fair share of that revenue.

The incoming Trump administration has big plans to cut wasteful spending in the Federal government. However, it's hard to imagine those cuts will apply to funding for space programs.

That's why it's important to note that the Electron and Neutron rocket launches are only the first phase of the company's vision. That will include the company's selection by NASA to conduct a study to retrieve samples from Mars. The company's larger goal is to have its products launched from space with its own satellite constellation.

There's Still Time to Get In

RKLB stock is now trading at an all-time high. However, the spike in RKLB stock may not be sustainable for a few reasons.

First, Rocket Lab has a short-interest ratio of over 19%. That's important because it means that the current price action may be due, in part, to short sellers having to cover their positions. Squeezes can last longer than expected, but they can reverse as quickly as they start.

Second, this company is still not profitable. In the current quarter, Rocket Lab posted a net loss of $51.9 million or 10 cents per share. This beat expectations of an 11-cent per share loss, which reflects increased research and development costs.

It's also important to note that the current stock price exceeds even the most bullish analyst forecast heading into the report. That came from Citigroup Inc., which raised its price target on RKLB stock from $7 to $13 on November 6.

At the same time, Rocket Lab has a healthy balance of cash and cash equivalents of $292.5 million, which means investors shouldn't have any immediate concerns about the company needing to raise capital.

This is where the words of legendary basketball coach John Wooden come to mind. You'll want to be quick, but don't hurry to go all in on RKLB stock. It's unlikely that this stock is going back below $10. But a likely pullback will give you time to add to your position.