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Why Rocket Lab Stock Blasted 20% Higher Today

By Rich Smith – Sep 9, 2021 at 12:25PM

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Rocket Lab's first earnings report showed no actual earnings -- but plenty of growth.

What happened

Last night, Rocket Lab USA (RKLB 0.71%) released its first earnings report as a publicly traded company. This morning, the stock is certainly living up to its name -- blasting off 20% as of 10:20 a.m. EDT in response to the news.

So what did Rocket Lab have to tell us?  

White rocket zooming up like a stock on a blue chart.

Image source: Getty Images.

So what

Actually, as it turned out, last night's news was in large part a recap of what the company had already revealed in its 8-K filing with the Securities and Exchange Commission back on Aug. 31.

Revenue from the three missions launched in the first half of 2021 was $29.5 million, up 237% year over year. Backlog -- which you can think of as future revenue because it represents contracts for space launches the company hasn't yet conducted -- grew 136% year over year to $141.4 million. (Rocket Lab has launched one mission in this year's second half, in July).

And as the company gets bigger, economies of scale are starting to kick in. Gross profit margins flipped from negative 67% a year ago to positive 13% this year. Granted, Rocket Lab still isn't earning profits according to generally accepted accounting principles (GAAP), but the company has now recovered two different Electron boosters, advancing the day when its rockets become reusable -- and maybe even profitable.

Now what

Looking ahead, Rocket Lab did not provide specific financial guidance for the rest of this year. Management did advise, however, that it has just signed a contract with French Internet of Things company Kineis to launch and deploy that company's entire constellation of 25 communications satellites, beginning in the second quarter of 2023, and that defense contractor General Atomics has hired it to launch its upcoming Argos-4 mission for the U.S. Space Force in 2022.  

With new contract announcements coming fast and furious, investment bank Canaccord Genuity today called Rocket Lab "the second most prolific commercial launch operator next to SpaceX," and initiated coverage of the stock with a buy rating and a $30 price target.  

With today's gains, the stock is already well on its way to hitting that target.

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.

Stocks Mentioned

Rocket Lab Usa Stock Quote
Rocket Lab Usa
RKLB
$4.25 (0.71%) $0.03

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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