Rocket Lab Shares Surge Despite Losses: What's Driving the Momentum?

Shares in Rocket Lab, the New Zealand-founded space company, have surged more than 800% over the past year, reaching nearly US$50 per share. This dramatic rise comes despite the company recording a loss of US$33 million to US$35 million in the 2024 financial year, following a revenue peak of US$436.2 million. The question on many investors' minds is: What's behind this remarkable performance?

Investor Confidence in the Face of Losses

Greg Smith, head of retail at Devon Funds, explains that investors are looking beyond current profitability, focusing instead on the company's growing credibility and strategic partnerships. Rocket Lab has secured key deals with national space agencies, including a recent agreement with the European Space Agency to launch satellites for a navigation constellation before December 2025.

The company has also demonstrated consistent success with its Electron rocket, achieving a launch every 15 days and successfully completing its 66th, 67th, and 68th missions. Smith highlights the upcoming Neutron rocket as a major growth driver, with the potential to unlock US$5.6 billion in National Security Space Launch contracts if it proves successful.

Future Potential and Market Hype

According to Gretjan Verdickt, a finance lecturer at the University of Auckland, Rocket Lab's current valuation is heavily influenced by optimism about the future of the space industry. While the company is not yet profitable, its strong revenue growth and a backlog of over US$1 billion in signed contracts are seen as solid indicators of future success.

Verdickt notes that the company's valuation is partly driven by hype and a