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Why Rocket Lab Stock Roared Higher Today

By Rich Smith – Sep 7, 2021 at 10:37AM

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Earnings are coming. Here's what to look for.

What happened

For the third trading day in a row, Rocket Lab USA (RKLB -2.51%) stock roared higher Tuesday.

After erupting nearly 15% in response to news of a big expansion in production of reaction wheels Thursday, then proceeding to gain more than 16% Friday, on Tuesday, new space stock and occasional defense contractor Rocket Lab is up another 13.4% as of 10:15 a.m. EDT.

Horizontal Electron rocket.

Image source: Rocket Lab.

So what

Why is that?  

On Friday evening, Rocket Lab announced that for its first time as a public company, it will report earnings on Wednesday, Sept. 8. Tomorrow evening, we'll hear directly from Rocket Lab on how fast its revenue has grown since the end of June, and how close the company might be getting toward profitability.

At last report, Rocket Lab was generating revenue at the rate of about $59 million a year through the end of June, but losing money on its launches. Its run rate for profit was about $65 million per year, and free cash flow was closer to negative $82.6 million per year.

Now what

Now, Rocket Lab will have a chance to change that story -- or at the very least, explain why it's losing so much money and when it expects to break even and start earning money instead.

Management will also get a chance to speak directly to investors and describe its plans for the future -- whether it really intends to spend a spaceship to Venus on its own dime, for example, and how far along it has progressed on building a new Neutron rocket with 27 times the payload capacity of its workhorse Electron rocket.

Whether Rocket Lab stock can maintain and extend its growth trajectory over the coming quarter will depend largely on what Rocket Lab management tells us tomorrow.

Rich Smith owns shares of Rocket Lab USA, Inc. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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