Rocket Lab Stock Up 31% in September – Time to Buy RKLB Stock?
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The price of Rocket Lab stock – formerly Vector Acquisition (VACQ) – was propelled in the past two trading sessions after the company announced that it started the construction of a new production facility that would be capable of supplying up to 2,000 reaction wheels per year.
According to a press release from 1 September, this facility includes a large manufacturing plant of 380,000 sq/ft and will be designed to fulfill the growing demand for satellite constellations.
Rocket Lab aims to become a dominant force in this market as, in the past, it has been primarily served by individual engineering firms who have been unable to meet the increased demand for specialized spacecraft and satellite components.
Market participants appear to have reacted positively to the news as shares of Rocket Lab rose 15% and 16% respectively on the two days that followed the announcement while the price action has broken a descending triangle formation.
Moving forward, can the price of Rocket Lab shares continue to jump on the back of this positive development?
In the following article, I’ll take a look at the latest price action while also assessing the potential impact that the construction of this facility could have on the company’s financial results in the following years.
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Rocket Lab Stock Price – Technical Analysis
The past two sharp upticks that Rocket Lab’s stock experienced on 2 and 3 September led to a break of a descending triangle formation that started to form in late March and it was accompanied by above-average trading volumes.
High volumes are often a confirmation of the pattern and, in the case of Rocket Lab stock, this break could lead to a jump toward the $15 level. Even though a big portion of the upside may have already been realized, if a pullback takes place in the following sessions, that would be another opportunity for late buyers to enter the stock with this mid-term price target in mind.
Momentum oscillators at the moment are supporting this bullish outlook as the Relative Strength Index (RSI) and the MACD have risen to levels that indicate a shift in momentum. Even though they seem stretched, the fact that the stock is reversing a former downtrend makes these higher momentum readings a signal that the direction of the short-term trend has changed.
Rocket Lab Stock Price – Fundamental Analysis
With the completion of Rocket Lab’s SPAC-sponsored initial public offering (IPO), the company raised a total of $777 million in capital that will be probably be earmarked for this ambitious project.
Moreover, the company stated that it plans to use a portion of the proceeds to further develop its 8-ton payload class Neutron rocket for the expansion of its end-to-end launch segment.
In the past two years, total revenues for the firm have landed at $48.4 and $35.2 million respectively while its net losses have remained fairly under control. Last year, the company lost $55 million while it reported a total cash burn of approximately $65 million.
According to its investor presentation, Rocket Lab has performed 20 successful launches in less than 6 years while it deployed a total of 104 satellites to orbit. The company is currently the second most frequently launched US rocket behind SpaceX.
Meanwhile, the value of its total addressable market (TAM) is expected to grow to $1.4 trillion by 2030 – nearly four times its current value – as a result of the increased adoption of satellite constellations, the full-blown deployment of 5G satellite-powered networks, and other similar trends.
At its current market capitalization of $6 billion, the company could be a potential top growth pick in the up-and-coming space industry. For reference, SpaceX, its most important rival and the current leader in end-to-end space launch solutions, was recently valued at $74 billion during its latest funding round.
If Rocket Lab’s management team, which is comprised of top industry veterans, manages to live up to its promises, chances are that this company could be significantly undervalued based on its future prospects.
Meanwhile, from a purely technical standpoint, the outlook is bullish based on the readings outlined above.
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