Rocket Lab (RKLB) shares are staging a recovery in premarket trading Monday, following a steep decline late last week. The stock is up about 6.13% to $108.67, after closing at $102.39 on Friday—a drop of 10.79% that was largely attributed to the market debut of SpaceX. Investors appear to be rotating back into the space sector after the initial shakeout.
KeyBanc Upgrade Sparks Rebound
The positive premarket action was triggered by an upgrade from KeyBanc Capital Markets. Analyst Michael Leshock raised his rating on Rocket Lab to Overweight from Sector Weight, and set a price target of $135. The upgrade comes on the heels of Friday's selloff, which saw both Rocket Lab and Planet Labs lose about 8% as traders reallocated capital following SpaceX's entry into the public markets. Leshock's call suggests that the recent weakness presents a buying opportunity, with several catalysts on the horizon.
Nasdaq-100 Inclusion on the Horizon
A major upcoming event for Rocket Lab is its addition to the Nasdaq-100 index, scheduled for June 22. Nasdaq announced the rebalancing last Thursday, which will also include Astera Labs, CoreWeave, Nebius, and Teradyne. Index funds and ETFs that track the Nasdaq-100 will be required to adjust their holdings, potentially driving significant demand for Rocket Lab shares. CEO Sir Peter Beck described the milestone as "a landmark moment for Rocket Lab" in a company statement.
Solid Fundamentals Underpin the Story
Rocket Lab's recent financial performance provides a strong foundation for the bullish narrative. The company reported first-quarter revenue of $200.3 million, a 63.5% increase year-over-year. Its backlog reached $2.2 billion, up 20.2% from the previous quarter. The backlog comprises signed contracts that have not yet been recognized as revenue. During the quarter, Rocket Lab announced 31 new Electron and HASTE launch deals, as well as five for its upcoming Neutron rocket, which targets the larger launch market where SpaceX currently dominates.
Valuation and Risks Remain
Despite the positive catalysts, Rocket Lab's valuation remains a point of contention for skeptics. The company is not yet profitable, resulting in a negative price-to-earnings ratio. With a market capitalization of approximately $62 billion and forecast 2025 revenue of $601.8 million, the stock trades at roughly 100 times trailing sales—a premium even by aerospace standards. Some analysts caution that investor rotation toward SpaceX could continue to pressure Rocket Lab and similar names, especially if SpaceX maintains its position as the sector's benchmark.
Technical and Fundamental Catalysts Ahead
While the stock is not cheap, the upcoming Nasdaq-100 inclusion, the KeyBanc upgrade, a robust backlog, and progress on the Neutron rocket all provide potential upside. Much of the good news may already be priced in after the stock's strong run, but index fund buying on June 22 could offer a temporary technical boost. The real test for Rocket Lab will be converting its backlog into sustainable profits and advancing Neutron without significant cost overruns or delays.
