Rocket Lab Stock: 118% Gain – Still a Buy?

Rocket Lab (RKLB) has seen its stock price soar 118% over the past year, driven by strong operational performance and a transformative acquisition. In Q1 2026, the company signed a record 31 launch contracts, more than it sold in all of 2025. Revenue surged 64% to $200 million, beating analyst expectations, while losses narrowed to $0.07 per share from $0.12 a year ago.

Beyond the quarterly results, Rocket Lab announced plans to acquire Iridium Communications (IRDM) for nearly $8 billion in a half-stock, half-cash deal expected to close in the first half of 2027. Iridium provides satellite-based mobile communications to 2.5 million subscribers and is profitable, generating over $114 million in net earnings in 2025.

The acquisition positions Rocket Lab as a major player in satellite communications, complementing its existing launch business. The company also holds significant defense contracts, including work on the U.S. government's Golden Dome missile defense system and over $1 billion in contracts with the Space Development Agency for missile-tracking and military communications satellites.

Despite the positive momentum, Rocket Lab remains unprofitable, losing $45 million in Q1. Its stock trades at a price-to-sales ratio of 82, far above the tech sector average of 9. The company also faces execution risks, particularly with the upcoming first test flight of its Neutron rocket later this year.

Rocket Lab's rapid growth and strategic moves make it a compelling story in the space industry. The Iridium acquisition could transform the company into a vertically integrated space powerhouse, combining launch services with satellite communications. This could help it compete more effectively with SpaceX, which dominates both launch and satellite services through Starlink.

The defense contracts provide a stable revenue stream and underscore Rocket Lab's importance to national security. These contracts are long-term and could grow as the U.S. increases space spending.

However, the stock's high valuation is a major concern. A P/S ratio of 82 means investors are pricing in years of future growth. Any misstep, such as delays in the Neutron rocket or integration issues with Iridium, could lead to sharp sell-offs.

For investors, the key question is whether Rocket Lab can achieve profitability and sustain its growth trajectory. The company's losses are narrowing, but it's not yet profitable. The Iridium acquisition adds debt and integration risk, though Iridium's profitability could help accelerate the path to positive earnings.

Overall, Rocket Lab offers high potential but comes with significant risk. The next few quarters will be critical in determining whether the company can execute on its ambitious plans.