Rocket Lab (RKLB +1.13%) is carving out an important niche in the space industry, and the company's upcoming Neutron rocket could be the key to its eventual success.
Some investors looking to benefit from Rocket Lab's potential growth are likely wondering whether owning enough Rocket Lab stock could turn them into millionaires when this rocket stock takes off.
While I think Rocket Lab stock is worth owning, it's unlikely to make you a millionaire. Here's why.
Image source: The Motley Fool.
Why Rocket Lab has lots of potential
Rocket Lab is readying its newest rocket, called Neutron, after a series of delays. Neutron will represent a significant upgrade in capabilities from its current Electron rocket, able to send more than 28,000 pounds into lower Earth orbit (vs. 661 pounds with Electron) and deploying more of the company's new flat-panel satellites.
The reusable rocket is central to Rocket Lab's growth, and management said on the second-quarter earnings call that it expects Neutron to reach the launchpad in Q4 of this year, though it might not launch then.
Still, Neutron's launch debut is getting closer, and customers are already lining up. Rocket Lab already has at least seven Neutron-specific commercial launches in its backlog through 2029, and more are likely on the way through government defense launches.
While modest, Rocket Lab's sales are growing at a healthy clip and rose 62% in the second quarter (ended June 30) to $234 million. It also has nearly $2.4 billion in launch backlogs -- not guaranteed revenue, but potential sales -- tied to both its Electron and Neutron rocket launches.
NASDAQ: RKLB
Key Data Points
Rocket Lab is probably worth owning, but won't make you a millionaire
I think Rocket Lab's Neutron rocket, paired with the expanding space industry, offers investors a unique investment opportunity. Space Exploration Technologies is an obvious competitor, but Rocket Lab has a financial advantage because it's not spending tens of billions of dollars to build expensive AI data centers.
What's more, analysts are bullish on Rocket Lab, with an average price target of $112.65. That's a significant upside potential of about 77% from the stock's current price.
But even with all of its potential, millionaire-making stocks are few and far between. And Rocket Lab would have to pull off some astronomical feats to mint millionaires.
For example, let's assume you made a sizable $10,000 investment in Rocket Lab right now. Rocket Lab would have to 100x to turn that into $1 million. With a market cap of about $40 billion, Rocket Lab would have to balloon into a $4 trillion company.
Only a handful of the world's largest tech companies -- like Apple and Nvidia -- are worth that much.
So while owning Rocket Lab is a good way to play the new space race, it's best not to hope that the stock will make you a millionaire.
