Rocket Lab (NASDAQ:RKLB) recently reported strong third-quarter earnings last week, with revenue reaching a record $155 million, up 48% year-over-year and in line with the upper end of management’s guidance. Its contract backlog also surpassed $1 billion, indicating strong future visibility in revenue.
However, Rocket Lab’s stock has fallen over 12% after the report, primarily on concerns over delays in the launch schedule of its next-generation Neutron rocket. Originally scheduled for late-2025, it has been moved into 2026. Since Neutron is key to accessing the medium-lift segment of the space market and driving its next growth stage, this has sparked investor concerns as Rocket Lab’s investments in the Neutron have kept it from achieving profitability.
However, the market’s reaction is excessive and investors needn’t worry. Management’s emphasis on quality ensures rocket reliability, making this dip a prime entry point at reduced valuations and positions Rocket Lab to multiply its value fivefold by 2035.
Core Business Strength and Growth
Rocket Lab’s revenue momentum is clear. The 48% year-over-year jump in Q3 underscores its operational strength amid rising space industry demand and competition, as it is gearing up to target the same market SpaceX‘s (SPAX.PVT) Falcon 9 currently owns.
Backlog growth to over $1 billion, including $100 million in new launch contracts just this quarter, points to sustained revenue pipelines. This surge highlights the intense demand for new satellite constellations, where Rocket Lab is capturing a huge share of the market as a reliable provider for building out space networks.
The workhorse of this effort is Rocket Lab’s Electron rocket, which continues to excel. It booked 17 new missions in Q3, conducted successful hypersonic tests, and is on track for a record number of launches in 2026. Its precision for small payloads suits emerging satellite networks, helping Rocket Lab command roughly 50% of the small launch market where consistency matters most. Electron’s reliability and availability are crucial for customers aiming to deploy constellations quickly and without disruptions.
The Speed Bump That Worried the Market
The shift to a 2026 launch for Neutron isn’t the red — or even yellow — flag the market presupposes, but a prudent step for a company with its eye on long-term viability. Leadership, including CEO Peter Beck, is prioritizing avoiding risks that could harm Rocket Lab’s credibility, framing the delay as a deliberate choice to protect the company’s reputation rather than rushing to meet a calendar date.
Such delays are standard in aerospace, and the initial market response was positive with a share pop, as analysts gave Rocket Lab a pass on the delay. However, investors apparently reconsidered and subsequently sold down the stock.
Yet the space company’s current operations provide it with a buffer and time to refine this game-changing new rocket, ensuring it launches right, not just fast.
These operations are the result of increasing vertical integration and ownership of the entire value chain. Rocket Lab handles everything from rocket launches to satellite construction and component manufacturing, like advanced sensors and instruments. This streamlines processes, reduces dependencies, and captures more value as it captures the customer from end-to-end.
Acquisitions have added capabilities in areas like laser communications, while space systems thrive with projects like ready-to-go spacecraft for NASA’s Mars missions, massive satellite production orders for customers such as the Space Development Agency, and even building mission payloads. This diversified approach turns Rocket Lab into a full-service powerhouse in the high-stakes space world.
Solid Financial Position
With over $1 billion in cash and equivalents, Rocket Lab is able to invest in Neutron’s development without financial pressure, while also serving as a massive war chest for development and acquisitions.
Rocket Lab’s fourth-quarter guidance forecasts even higher revenue and improved margins, reflecting core business acceleration. Management highlighted that profitability could be achieved now if not for its future-focused spending. The CFO pointed out the company would already be profitable today if it wasn’t investing the Neutron rocket.
Key Takeaways
Management’s approach is exactly what you want in your stock’s C-suite: focus on execution quality over haste, opting for delays to prevent reputation-damaging setbacks. The backlog is robust for Electron and Neutron alike, securing workloads well into the future.
Rocket Lab’s full value chain ownership — from launches to spacecraft and components — drives efficiency and margins. Giving up profits today to make substantially more in the future is a smart decision and will pave the way for a significant valuation rerating over the next decade.
This patient strategy, backed by a thriving core business, positions Rocket Lab to solidify its leadership in the new space race. With institutional buying also surging to record levels — especially in the third quarter — it signals strong confidence from big investors who are looking forward to Rocket Lab’s coming moonshot.