Shares of quickly growing launch services and space systems leader Rocket Lab USA (RKLB 4.91%) have soared 16% higher as of 1 p.m. ET on Friday after the company landed its largest contract so far. The Space Development Agency awarded Rocket Lab with a firm fixed-price agreement potentially worth $805 million to deliver 18 missile warning, tracking, and defense space vehicles.
This is not just a significant financial win for the company, but also demonstrates its growing importance alongside traditional defense primes, as it was selected with Lockheed Martin, L3Harris Technologies, and Northrop Grumman for the task. The new deal comes just one day after Rocket Lab successfully launched the STP-300 mission for the U.S. Space Force five months ahead of schedule, which prompted shares to rise by roughly 10% yesterday.
NASDAQ: RKLB
Key Data Points
Rocket Lab's big deal
To put the size of Rocket Lab's largest-yet, $805 million deal in context, the company's total revenue over the last year was only $555 million. Similarly, the company's backlog at the end of the third quarter was just $1.1 billion, so this contract is a game changer for the company -- and the market seems to agree.
Image source: Getty Images.
The main reason investors should be excited about today's news is that it reinforces Chief Executive Officer and founder Peter Beck's ambitions as an end-to-end space company, rather than just a rocket launch business. Rocket Lab's space systems business segment only equaled 6% of total revenue in 2020 (launch comprised the rest), but now accounts for nearly 75% of the company's sales. Over this time, the space systems unit grew from $2.1 million in sales in all of 2020 to $114 million in just the third quarter of 2025 alone.
Trading at 64 times sales, Rocket Lab will be a volatile stock. However, as the company nears the launch of its larger, medium-lift Neutron rocket, the growth optionality provided by its booming space systems and payloads businesses is immense -- as today's deal highlights. This optionality will keep me buying Rocket Lab shares for years to come.
