Why Rocket Lab Stock Surged 40% in the First Half of 2025

Key Points

• Rocket Lab stock is surging because of its growth in the space economy.

• It is working on a new rocket system called the Neutron.

• Shares look overvalued right now.

• 10 stocks we like better than Rocket Lab ›

Shares of space flight company Rocket Lab (NASDAQ: RKLB) soared 40.4% in the first half of 2025, according to data from S&P Global Market Intelligence. A fast-growing company in the exciting space economy, Rocket Lab is up close to 600% in the last year and is inching its way closer to competing with SpaceX, which now has a reported valuation of $400 billion.

There is a ton of excitement around Rocket Lab and the space economy today. Here's why the stock surged in the first half of 2025.

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Image source: Getty Images.

The next SpaceX?

Rocket Lab is aiming to build the next vertically integrated space flight company based in the United States. It began with its small Electron rocket, which has now completed 68 missions and has a large backlog from customers. The launch vehicle is the only other consistent commercial launcher, outside of SpaceX, carrying payloads for third-party customers.

On top of launching, Rocket Lab has built and acquired capabilities to sell space systems to customers, which include things like satellites, communication systems, and solar arrays. This has been a huge boon to the company, leading to the division now accounting for the majority of its overall sales.

Lastly, Rocket Lab is working on a larger rocket system called the Neutron, which is going to compete with SpaceX more directly. Testing of the Neutron will begin shortly, with the full-fledged reusable system expected to be ready within the next year or two. If the Neutron is successful, Rocket Lab could see a step change in growth in the coming years.

Revenue was $122.5 million last quarter, up 32% year over year, and is up an astonishing 734% in the last five years. Seeing this growth, investors are extremely optimistic about Rocket Lab's future.

Should you buy Rocket Lab stock?

Today, after Rocket Lab's surge, the stock is at a market cap of $18 billion. Revenue was just $466 million over the last 12 months.

Sales should continue to grow quickly, but this is an extreme valuation. The stock has a price-to-sales ratio (P/S) of 42, which is unsustainable. Investors are placing huge forward expectations on Rocket Lab after seeing the stock rise 600%, which should make any investor looking to buy right now nervous. Even if the company eventually reaches billions of dollars in annual sales, the stock will likely not perform well for shareholders going forward. Avoid buying Rocket Lab stock in your portfolio today.

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Brett Schafer 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.