What happened
Rocket Lab USA (RKLB 3.29%) met analyst expectations for the quarter but forecast a slower-than-expected next few months. Investors largely hit the eject button, sending Rocket Lab shares down 14.4% for the month, according to data provided by S&P Global Market Intelligence.
So what
Rocket Lab is one of a handful of space stocks focused on delivering payloads to orbit. Unlike some of its rivals, the company has a track record of successful launches and steady revenue streams for investors to consider.
The company lost $0.10 per share in the second quarter on revenue of $62.05 million, within the range of analyst expectations for a $0.09-per-share loss on sales of $61.79 million. Rocket Lab completed three successful launches in the quarter and also had at least 17 spacecraft featuring company components deployed into orbit.
But investors were more focused on what is to come. Rocket Lab forecast revenue of between $73 million and $77 million in the current third quarter, which is short of the consensus $82.87 million estimate heading into earnings season. That guidance sent Rocket Lab shares into the red after earnings, and the stock wasn't able to regain altitude as the month went on.
Now what
Space is an intriguing sector for investment but requires patience. Rocket Lab still has a long journey ahead of it before it is consistently profitable, but appears to be on the right track to reach its destination.
Rocket Lab is on target to complete 15 launches this year and 20 in 2024, including six in the last three months of 2024. There has been a bit of a shakeout in the launch space of late, with Rocket Lab able to acquire the assets of rival Virgin Orbit out of bankruptcy in the quarter. With the company's track record of successful launches, investors should see some added pricing power in new contracts, allowing Rocket Lab to move toward profitability.
Risks remain. Space is complicated, and Rocket Lab is investing heavily in new technologies, including its Neutron medium-lift rocket. Investors who are intrigued by the opportunity should understand that Rocket Lab remains a speculative stock, and there is a chance the company could flame out before it turns profitable.
But for those who can stomach some volatility and are interested in space investing, Rocket Lab is emerging as one of the best opportunities in the sector. It won't happen overnight, but Rocket Lab's choppy quarterly results and forecasts should not deter a long-term-focused investor.
