Many investors are captivated by the potential initial public offering (IPO) of Elon Musk's SpaceX at some point this year. For those interested in the space economy, already-public Rocket Lab (RKLB +11.96%) could be worth a closer look as a potential alternative to a SpaceX initial public offering, or as the beginning of a basket of space stocks within a diversified portfolio. Here are three predictions for Rocket Lab in 2026.
Neutron will drive Rocket Lab stock
The big news around Rocket Lab this year is the introduction of its Neutron rocket. This is the company's next-generation reusable rocket that is expected to debut in the first half of 2026. The Neutron is designed for deep space missions and will be able to return to the launch site after delivering its payload in space.
Recently, Rocket Lab announced a setback with its Neutron rocket when a tank ruptured during a qualification test. While it's reasonable to assume this could delay the initial launch schedule, the company has not confirmed this and stated it would share more details at its upcoming fourth-quarter 2025 earnings call.
Rocket Lab's stock is down 16% since the announcement of the ruptured tank, demonstrating how much of Rocket Lab's expectations are tied to a successful launch of the Neutron rocket.
NASDAQ: RKLB
Key Data Points
Electron will continue to grow revenue and contracts
While much of the attention is around the upcoming Neutron debut, the company's smaller rocket, the Electron, continues to launch missions successfully. The Electron has had 81 launches to date and has successfully deployed nearly 250 satellites. Rocket Lab uses the Electron to help government and commercial customers deliver spacecraft into orbit.
Electron launches are important for the company and for investors, as the cadence of launches will directly impact the company's revenue and margins. As the pace of launches increases, profitability improves and the company generates the cash needed to support the Neutron and other new verticals.
There will be continued volatility
Rocket Lab will, no doubt, be a volatile stock. As the recent qualification test mishap demonstrated, the stock will move dramatically on any news about launch success or failure. To demonstrate the point, Rocket Lab's beta is 2.18, so investors can expect the stock to be more than 2 times as volatile as the overall market.
Add to that the potential IPO of SpaceX, and Rocket Lab is sure to start getting more attention and direct comparisons to its larger competitor. This is all a recipe for a wild ride that investors need to be prepared for. Rocket Lab could grow to be a winner in the emerging space economy. However, even in the most optimistic scenario, it's likely to be a bumpy ride getting there.
