Rocket Lab Stock Gained 118% Over the Past Year. Is It Time to Buy?
Key Points
Rocket Lab is expanding its satellite communications business with its $8 billion purchase of Iridium.
The company is already a top rocket launch provider and just signed on for 31 additional launches.
Owning a small position could be a great way to gain exposure to the booming space industry.
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Rocket Lab (NASDAQ: RKLB) is understandably getting a lot of attention from investors these days. The company is making big moves in the rocket-launch space and has recently made an important acquisition that could establish it as a key player in the satellite market. It's also on many people's radars, considering that it's increasingly becoming a competitor to Space Exploration Technologies.
Rocket Lab shares are up 118% over the past year, and while its share price has been volatile, there are some reasons why owning Rocket Lab stock could be a good long-term bet. Here's why.
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A formidable space launch and satellite company
Rocket Lab is one of the largest rocket launch companies, providing launch services to its customers. The company just had one of its best quarters, with a record number of launch contracts ever -- the company signed 31 in Q1 2026. Rocket Lab sold more launches in the first quarter than it did in all of 2025.
In addition to record contracts, the company's financials were also impressive in the quarter. Sales rose nearly 64% in the quarter to $200 million, outpacing Wall Street's consensus estimate of about $189 million. The company's losses also narrowed to $0.07 per share, better than the consensus estimate of $0.08 per share, and up from a loss of $0.12 per share in the year-ago quarter.
While that growth has fueled considerable optimism for Rocket Lab, the company recently announced plans to buy Iridium Communications (NASDAQ: IRDM), which could propel its growth even higher. Iridium provides satellite-based mobile communications services to its 2.5 million subscribers across both private and government sectors.
The nearly $8 billion purchase (in a half-stock, half-cash deal) is expected to close in the first half of 2027 and will give Rocket Lab a significant position in the satellite communications industry -- all while maintaining its rocket launch business. Iridium is also profitable, generating more than $114 million in net earnings in 2025.
While Rocket Lab's business isn't as large as SpaceX's, owning Iridium will help Rocket Lab to compete with SpaceX's satellite and rocket launch business. And that's not its only space-based play, either.
Rocket Lab already has notable defense contracts with the U.S. government, including to help build a satellite system for its proposed Golden Dome missile defense system. And that's in addition to contracts it already has with the Space Development Agency (SDA), which are currently worth more than $1 billion for missile-tracking and military communications satellites.
Lots of potential, but there are some risks for Rocket Lab
With its Iridium acquisition, government contracts, rising sales, and overall position in the launch and satellite communications space, Rocket Lab is certainly worth your consideration right now.
But that doesn't mean the stock will be a guaranteed winner. Its shares can be very volatile, and any delay for its Neutron rocket, which will have its first test flight later this year, could cause investors to react negatively.
What's more, being a SpaceX competitor could be both a blessing and a curse. Rocket Lab could benefit when SpaceX and the general space industry are doing well, but negative news for SpaceX could make Rocket Lab shares more volatile in the short term.
And finally, investors need to be aware that Rocket Lab isn't profitable -- it lost $45 million in the first quarter -- and its shares trade at a price-to-sales ratio of 82, which is quite a premium. The tech sector P/S ratio average is 9.
Still, Rocket Lab appears to be worth at least some of the risk right now. The company is already a top player in the growing space launch and satellite communications industries. Starting a small position or adding to an existing one while shares are lower is probably a smart move.
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Chris Neiger 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.
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