Rocket Lab's Next Neutron Milestone Is a Pad Delivery, Not a Launch. I'd Hold Off on Buying the Stock.

When Rocket Lab (NASDAQ:RKLB) updated investors on its Neutron rocket last month, the target it offered wasn't a launch. It was a delivery.

Production of the rocket's first-stage tank, the company said in its Aug. 10 second-quarter update, is "aligned with the target delivery of Neutron to the launch pad in Q4 2026." A launch date doesn't exist yet.

That distinction matters for a growth stock priced the way this one is. Shares trade in the mid-$60s as of this writing, 57% below their 52-week high of $151.

Even after that slide, the space company carries a valuation of about $38 billion (roughly 50 times its trailing-12-month revenue).

Much of what's in the price is Neutron, the bigger, reusable rocket built to compete with SpaceX for heavier launches.

Is the stock a buy before that rocket leaves the ground?

Image source: Getty Images.

Neutron's next milestone isn't a launch

Delivering a rocket to a launch pad isn't the same as launching one. Management acknowledged in the update that the window for a launch before year-end is narrowing, and that the timing depends on first-stage qualification and other critical tests later this year.

The schedule has moved before, too. Mid-year was the target until a first-stage tank ruptured during pressure testing in January, which pushed the debut to late 2026. I wouldn't be surprised if the first flight slips into 2027.

The wait isn't trivial. After all, sizable contracts ride on this rocket. In August, Rocket Lab won a $397 million U.S. Space Force contract to build, launch, and operate satellites for an airborne-threat-tracking program -- and those satellites are slated to fly on Neutron.

Even a successful debut wouldn't flip the economics right away. Chief financial officer Adam Spice said on the company's second-quarter earnings call that he expects adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) to turn positive in the quarter after Neutron's first successful test launch. And free cash flow, he said, would probably turn positive 18 to 24 months after that, as Rocket Lab invests in a fleet of Neutron boosters.

In other words, a buyer today is waiting on a date that doesn't exist to start a clock that could run well into 2028.

Records without Neutron

Meanwhile, the business Rocket Lab already operates keeps performing. Second-quarter revenue rose 62% year over year to a record $234 million, up from $144 million a year earlier. Management guided for third-quarter revenue of $250 million to $265 million -- another record and another step up. And last week, the company's small Electron rocket flew its 94th mission, Rocket Lab's 15th launch of 2026.

The mix behind those impressive numbers is worth noting, though. Launch services generated $44.6 million of the quarter's revenue (less than a fifth of the total), while space systems, the segment that builds satellites and components, contributed $189.5 million. In short, the company investors can buy today is mostly a satellite manufacturer with a busy small rocket attached.

The losses haven't gone away, either. Rocket Lab's adjusted EBITDA loss narrowed to $8.8 million in the second quarter from $27.6 million a year earlier, but guidance calls for a loss of $17 million to $23 million in the third quarter. As Spice's timeline suggests, the swing to sustained profits still waits on Neutron.

Can Rocket Lab afford the wait?

Easily -- and that's arguably the strongest part of the story. After raising about $1.5 billion through at-the-market stock sales in the first half, Rocket Lab ended June with about $2.4 billion of cash and marketable securities.

Operations consumed $134 million of cash over those six months. Even if that pace doubled, the company could fund years of Neutron development.

However, it's worth knowing where the money came from: shareholders. The cash that makes the delays affordable was raised by selling new stock.

And more claims on the balance sheet are coming. Rocket Lab's pending acquisition of satellite operator Iridium Communications, expected to close in mid-2027, includes $27 per share in cash. To be fair, Iridium generates substantial recurring cash flow, which would help the picture once the deal closes.

So, is Rocket Lab stock a buy with Neutron still on the ground? Not yet, in my view.

The operating business is executing, and the balance sheet can outlast the delays. But the milestone the price leans on isn't on the calendar, and even in the best case, the payoff behind it sits years out. If Neutron reaches the pad in the fourth quarter and a firm launch date follows, I'd take another look.

Daniel Sparks and his clients do not have positions in any of the stocks mentioned. The Motley Fool has positions in and recommends Rocket Lab. The Motley Fool has a disclosure policy.