Rocket Lab Reports Nov. 9. Here's What I'd Need to See Before Buying the Stock.

Source The Motley Fool

Key Points

  • Rocket Lab will release third-quarter results after the close on Monday, Nov. 9.

  • Management forecast a third-quarter adjusted EBITDA loss of $17 million to $23 million.

  • Neutron's first flight is now expected in 2027, with no new target date yet.

  • Motley Fool Issues Rare "Total Conviction" Buy Alert ›

Rocket Lab (NASDAQ:RKLB) will release its third-quarter results after the close on Monday, Nov. 9. Management has already forecast another record quarter, with revenue of $250 million to $265 million. Compared to $155 million in the third quarter of 2025, that would be growth of 61% to 71% year over year.

Revenue growth, though, doesn't look like the issue for the stock. Shares are near $58 as I write, about 61% off their record close in late May. In mid-October, the company said its Neutron rocket won't make its first flight until 2027. Even after the drop, investors pay about 38 times sales for a business that posted a net loss of $49 million in the second quarter.

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I haven't been willing to buy the growth stock this fall. But two things in the Nov. 9 report might change my mind.

The Rocket Lab logo over a red-tinted image of a rocket.

Image source: The Motley Fool.

Neutron needs a date again

When Rocket Lab moved Neutron's first launch into 2027 on Oct. 14, it didn't pick a new target date. CEO Sir Peter Beck said the company first has to make and test a new forward dome for the first-stage propellant tank, because the original had tiny air pockets in its carbon composite.

Next, the full first stage still needs to pass pressure and cryogenic tests. Beck expects that work to be done in the first quarter of 2027, and only then does Rocket Lab plan to give a new launch target.

So I'm not expecting a launch date on Nov. 9. What I'd like instead is evidence that Beck's schedule is holding -- progress with the replacement dome, and no sign that the first-quarter testing window is slipping.

After all, Neutron is linked directly to profitability. On the second-quarter earnings call, CFO Adam Spice said that, on a stand-alone basis, adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) should turn positive in the quarter after Neutron's first successful launch. Another delay would probably move that milestone back too.

Losses need to keep shrinking

Until Neutron flies, the business Rocket Lab already runs has to hold losses in check by itself. And so far, it has. Showing how much progress the company has made, Rocket Lab's adjusted EBITDA loss dropped from $26.3 million in the third quarter of 2025 to $17.4 million in the fourth quarter. It then shrank to $11.8 million in the first quarter of 2026 and to $8.8 million in the second quarter. Even more impressive, that improvement came while research and development spending kept climbing, to $82 million in the second quarter from $66 million a year earlier.

However, the third-quarter guidance ends the streak. Management expects an adjusted EBITDA loss of $17 million to $23 million. Non-GAAP (adjusted) gross margin was 41.5% in the second quarter. But the third-quarter outlook calls for just 35% to 37%.

Spice linked the lower margin forecast to a change in mix within space systems, the segment that makes satellites and spacecraft parts. In other words, more of its revenue is expected to come from lower-margin work. But Spice also said he expects the mix to help margins again after the third quarter.

Granted, Rocket Lab tends to beat its own loss guidance. It guided for a second-quarter adjusted EBITDA loss of $20 million to $26 million and posted $8.8 million. The first-quarter range was a loss of $21 million to $27 million, and the actual loss was $11.8 million.

The first number I'll watch for, then, is the third-quarter adjusted EBITDA loss, ideally at or better than the $17 million end of the range. Just as important is the fourth-quarter forecast for that loss.

What would make me a buyer?

In September, Rocket Lab finished selling about $1.94 billion in new stock (29.3 million shares) to help fund its pending purchase of Iridium Communications.

Including those shares plus the company's convertible preferred stock, Rocket Lab is worth about $39 billion at roughly $58 per share. Using the $1 billion yearly revenue pace its third-quarter guidance suggests, the stock trades at about 38 times sales. That's under half the sales multiple the stock had at its May peak. But at this price, investors are arguably still betting that Neutron flies close to Beck's schedule and launches often after that.

If the Nov. 9 report shows the new dome on track for first-quarter testing and a loss at the better end of guidance, I'd consider a small position, even at around 38 times sales. I'd want the fourth-quarter forecast to point to a lower loss, too.

If either slips, I'd hold off.

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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.

Disclaimer: For information purposes only. Past performance is not indicative of future results.
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