Shares of Rocket Lab (RKLB -3.37%) had a rough summer. At one point over the past month, the stock was down more than 30%. Even after a rebound, it's still down about 13% over that span.
That dip comes even as the business continues to grow at a healthy clip. First-quarter revenue jumped 63% year over year to a record $200 million, driven by stronger demand for launch services and space systems.
Image source: Getty Images.
Rocket Lab also posted a narrower-than-guided adjusted operating loss and completed its acquisition of Mynaric during the quarter, expanding its operational footprint in Europe.
So why the sell-off? One reason is cash burn. Free cash flow was negative $77 million, a wider loss than analysts expected. The bull case is that Rocket Lab's vertically integrated model will eventually translate into consistent profitability. It isn't there yet, but the longer-term direction for Rocket Lab still looks constructive.
NASDAQ: RKLB
Key Data Points
CEO Peter Beck called Rocket Lab "one of the only true end-to-end space companies on the planet." By controlling more of its supply chain, it can manage costs better than many competitors -- an advantage that should support healthier margins over time.
For long-term investors, the pullback looks like normal volatility. The core opportunity hasn't changed: Rocket Lab aims to take a larger slice of an expanding space economy that some Wall Street firms estimate could reach into the trillions over the next 20 years.
