Rocket Lab Is Days From a Major Earnings Report -- and Bettors Are Quietly Getting Bullish

Lately, space stocks have taken off like, well, rockets. Among these, Rocket Lab (NASDAQ: RKLB) has done particularly well, although it's down from its peak due to a failure in late-stage testing for a crucial company asset.

The stock still has plenty of believers. Eighty percent of folks placing wagers on prediction market operator Polymarket for Rocket Lab's fourth quarter are betting on a bottom-line beat when the period's figures are released on Thursday, Feb. 26. Here's my take on whether you should go for a ride with this stock, too.

Space is the place

Rocket Lab's foundational business is launch services; its Electron small-lift rocket specializes in delivering compact satellite clusters. In late 2021, sales for its space systems segment -- comprising products and services for satellite construction -- overtook those of launch services. These days, space systems is responsible for nearly three-quarters of total revenue.

Image source: Getty Images.

Yet, Rocket Lab has lofty ambitions for launch services. The company is deep in development of the Neutron, a much more powerful rocket than the Electron that, in its words, is "designed for mega constellation deployment, deep space missions, and human spaceflight."

The huge and versatile Neutron has great potential for a wide range of uses. There's a major hitch, though -- in late-stage testing last month, the craft's stage 1 fuel tank suffered a rupture. Although the so-called hydrostatic pressure qualification test was designed to subject components to near-maximum adverse conditions, the results were quite a setback.

Rocket Lab subsequently said its engineers were reviewing the trial data, adding that the craft's development would continue.

Launch limbo

Rocket Lab stated that it would supply an updated schedule on Neutron's development and -- if the coming test results are better -- eventual deployment. Its inaugural launch was most recently set for this year; it's almost certain this will be pushed back for several months at the very least.

The company has pinned much of its hope for the future of the launch services business on Neutron, so I think the market's reaction to the fourth-quarter results will depend more on that revised schedule for the rocket than the company's fundamentals. If the inaugural launch's delay doesn't stretch too far into the future (say, over a year or so), I'd expect the bulls to run free; otherwise, the stock could suffer quite a fall.

Still, it's always wise to keep an eye on a company's fundamentals. The consensus analyst estimate for fourth-quarter revenue growth is a meaty 34.6% year over year, to over $178 million. Rocket Lab is expected to post a $0.10-per-share net shortfall, in line with the year-ago result.

I'm generally bullish on this industry, despite the recent run-up in Rocket Lab and other space stocks' prices. I'd be inclined to take a flier on the stock, especially since the Neutron project has so much potential, though investing in the company remains quite speculative at present.

Eric Volkman 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.