Where Will Rocket Lab Stock Be in 5 Years?

The global space economy is shaping up to become a massive opportunity for growth investors. In fact, analysts at McKinsey & Company believe it could be worth $1.8 trillion by 2035 because of rising demand for satellite transport, internet connectivity, and even tourism.

But it won't necessarily be easy for relatively small players to get a foothold. Right now, the industry is dominated by large early movers like SpaceX and Blue Origin, which are significantly further ahead in both the regulatory process and the technical capabilities.

Let's dig deeper to see how Rocket Lab (NASDAQ: RKLB) aims to catch up over the coming years and explore what this could mean for the company's stock performance.

What makes Rocket Lab different?

There are some key differences between Rocket Lab and other major players in the space industry. For starters, it is publicly traded. And this means regular investors can buy its equity, unlike SpaceX, which isn't expected to be available to the public until its initial public offering (IPO) in June.

There is also the issue of size. While SpaceX is expected to be a $1.75 trillion behemoth, Rocket Lab is significantly smaller, with a market cap of just $38 billion. Many investors will see this as a perk because it gives them access to a long-term growth opportunity as it scales.

There are also technical differences between Rocket Lab and other players in the industry. For starters, its launch systems are significantly smaller, with the flagship Electron platform only capable of carrying payloads of up to 300 kg into low-Earth orbit (LEO).

This size pales in comparison to SpaceX's Starship, which boasts a payload of up to 150 tons, or Blue Origin's New Glenn, expected to carry 45 tons. Still, it can give the smaller company a unique niche where it can serve smaller clients that value speed and flexibility.

Rocket Lab is also investing heavily in vertical integration, with CEO Peter Beck aiming to create an end-to-end space company clients can rely on for services ranging from satellite design and manufacturing to delivery into space and even long-term operation.

Business momentum is strong

Rocket Lab's business is scaling up nicely. Fourth-quarter revenue rose 38% year over year to $180 million as the company flew seven Electron missions, boasting a 100% success rate for clients in both the public and private sectors. The company could help accelerate its momentum with a new rocket platform called Neutron, which will boast a payload capacity of 8,000 kg to LEO -- over 25 times more than Electron.

When it comes into service, Neutron could help supercharge Rocket Lab's growth by allowing it to make more efficient deliveries and possibly expand deeper into opportunities such as satellite constellations. These are large clusters of coordinated satellites designed to provide continuous service to an area. Naturally, the more satellites Rocket Lab can carry in one trip, the better it will be for this particular use case.

Image source: Getty Images.

What do the next five years have in store?

Rocket Lab's management expects Neutron's first launch to be in the fourth quarter of this year. But investors should take any timeline with a grain of salt because the program has experienced frequent delays. Management has previously said the launch would happen in 2025 -- and before that, 2024. And some analysts believe early 2027 is a more realistic deadline.

In the meantime, Rocket Lab continues to burn through cash with an operating loss of $51 million in the fourth quarter alone. The company looks capable of establishing a pathway to profitability over the next five years. But with a price-to-sales (P/S) multiple of 56, shares are quite expensive compared to the S&P 500 average of 3.2. And investors might want to wait for more information before considering a position.

Will Ebiefung 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.