Rocket Lab Delays Neutron Again. Is the Stock in Trouble?
Key Points
Neutron is a crucial part of Rocket Lab's future growth, and its launch has been delayed multiple times.
The business, however, continues to generate strong numbers.
Rocket Lab has promising opportunities in communications and space, but it may take a while before the business turns a profit.
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Last week was a bad one for rocket company Rocket Lab (NASDAQ:RKLB). It plunged on news that it would be delaying the launch of Neutron, which is now not expected to take place until next year. There have been multiple delays, and investors are growing frustrated.
In just the past six months, the stock has declined by close to 40%, with many investors potentially pivoting instead to Space Exploration Technologies Corp, Elon Musk's rocket company that went public back in the summer.
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Rocket Lab hasn't been as exciting a growth stock to own of late. But while a delay in the launch of its Neutron rocket is definitely not good news, that alone shouldn't be a reason to dump the stock. Here's why this may potentially be a good time to buy Rocket Lab on this weakness.
Image source: Getty Images.
The business has performed incredibly well, and it’s just getting started
Rocket Lab has not only generated strong growth in recent quarters, but its future remains highly promising. In its most recent quarter, which ended on June 30, the company's revenue rose by 62% year over year to $234 million. Its backlog was even more impressive, rising by 137% to a little less than $2.4 billion.
The company is also in the midst of acquiring satellite company Iridium Communications, which has a global mobile satellite network, and which would open more opportunities relating to communications.
The launch of Rocket Lab's Neutron rocket, however, is arguably the most anticipated event for growth investors, as it's capable of handling significantly larger payloads than Electron, and could help the business attain profitability in the future. A successful launch would mark a new wave of opportunities for the business. While a delay is disappointing, it's only a delay. When it comes to rockets, safety has to be the top priority.
Rocket Lab's stock could be worth buying right now
There's a ton of growth potential for Rocket Lab, and while the market may have reacted negatively to news of Neutron being delayed yet again, that doesn't mean the business is in trouble. At a lower valuation, the stock may be a much more appealing investment option to consider.
There's still risk here as the business isn't profitable, and it could be a long time before that changes, but for long-term investors who are willing to be patient, there are many reasons to remain optimistic about Rocket Lab's future.
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David Jagielski, CPA has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Rocket Lab. The Motley Fool has a disclosure policy.
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