Could Buying RKLB Before the SpaceX IPO Set You Up for Life?

SpaceX will likely become the biggest IPO in history when it goes public on June 12. But at its target valuation of $2 trillion, it would be valued at 107 times last year's sales. That's a bubbly valuation, even for a company that grew its revenue by 33% in 2025.

SpaceX also still generates most of its revenue from Starlink, its satellite internet service. Starlink is profitable, but the losses from SpaceX's space division, which produces its Falcon rockets, and its AI division, which owns xAI and X, are completely erasing those gains.

Image source: Getty Images.

Before SpaceX integrated xAI into its business in May, the company was profitable because it offset the space division's moderate losses with Starlink's rising profits. However, the integration of xAI -- which posted an operating loss of $6.4 billion in 2025 -- upset that balance.

That's why SpaceX posted a net loss of $4.3 billion in the first quarter of 2026 on just $4.7 billion in revenue. That's also probably why it's so eager to raise more cash and why it allocated up to 30% of its shares to retail investors rather than institutional investors. Those red flags are preventing me from placing an order for its IPO, which is already two times oversubscribed.

Instead of chasing SpaceX's volatile market debut, it might be smarter to simply invest in Rocket Lab (NASDAQ: RKLB) -- which also produces reusable orbital rockets but is growing faster, trading at a more reasonable valuation, and doesn't own a cash-burning AI business. Let's see why this smaller rocket stock could be a much better long-term buy than SpaceX.

The differences between Rocket Lab and SpaceX

Rocket Lab competes against SpaceX's space division. It's already launched its Electron rocket, which carries smaller payloads than SpaceX's Falcon rockets, 88 times. It plans to launch its new Neutron rocket, which carries heavier payloads than the Electron, by the end of this year.

Rocket Lab is much smaller than SpaceX, but it's already secured contracts from major customers such as NASA, the U.S. Space Development Agency (SDA), the Swedish National Space Agency, Capella Space, Kinéis, and BlackSky Technology. It aims to become an "end-to-end" space company by producing more spacecraft, satellites, and subsystems, launching more "ride-share" services for third-party payloads, and expanding its Photon satellite bus platform, which bumps satellites into their correct orbits.

In 2025, Rocket Lab's revenue rose 38% to $602 million, but its net loss widened from $190 million to $198 million. That's less than 6% of the $18.67 billion in revenue that SpaceX generated last year, but its business model is simpler, and its losses aren't as jarring.

From 2025 to 2028, analysts expect Rocket Lab's revenue to grow at a 38% CAGR. They also expect its adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) to turn positive in 2027 and grow 23% in 2028. They also expect it to turn profitable by generally accepted accounting principles (GAAP) in 2028.

We should take those rosy estimates with a grain of salt, but Rocket Lab's margins should improve as it launches more rockets, economies of scale kick in, and it expands its higher-margin space services segment. Meanwhile, SpaceX will continue to expand its unprofitable AI segment with more infrastructure investments -- and those steep losses will continue to offset the robust growth of Starlink's higher-margin satellite business.

With a market cap of $64 billion, Rocket Lab isn't cheap at 62 times last year's sales -- but it's still a bargain compared to SpaceX's target valuation of more than 100 times its 2025 sales.

Could buying Rocket Lab before the SpaceX IPO be a smart move?

Rocket Lab's stock has risen nearly 60% this year. Like other space stocks, Rocket Lab benefited from the soaring interest in SpaceX's looming IPO. But unlike SpaceX, Rocket Lab still looks reasonably valued and could deliver life-changing gains over the next few decades.

Leo Sun has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends BlackSky Technology and Rocket Lab. The Motley Fool has a disclosure policy.