Rocket Lab (RKLB) saw its stock price climb sharply on Friday after Nasdaq announced that the company would be added to the Nasdaq-100 Index, effective before the market opens on June 22. The inclusion marks a significant milestone for the space technology firm, which has been transitioning from a speculative growth story to a more established player in the aerospace sector.
Index Inclusion Drives Buying
The Nasdaq-100 tracks the 100 largest non-financial companies listed on the exchange. Index-tracking funds and ETFs, which collectively manage over $800 billion in assets tied to the index, typically purchase shares of newly added companies to maintain alignment with their benchmarks. This passive buying pressure can boost liquidity and visibility for the stock, making it more attractive to institutional investors.
RKLB closed Thursday's regular session at $114.78, up 9.26% on the day. In extended trading on Friday, the stock continued to rise, reaching as high as $122.98. The move comes as part of a broader rebalance that also includes additions like Astera Labs, CoreWeave, Nebius, and Teradyne.
Strong Fundamentals Support Rally
The index inclusion follows a strong first-quarter earnings report. Rocket Lab posted record revenue of $200.3 million, a 63.5% increase year-over-year. The company's backlog also grew to $2.2 billion, up 20.2% from the previous quarter, driven by 31 new launch contracts for its Electron and HASTE vehicles, as well as five dedicated Neutron launches. The launch manifest now exceeds 70 contracted missions.
CEO Peter Beck highlighted the company's momentum during the earnings call, noting that "Rocket Lab’s tailwinds are strong." The company guided second-quarter revenue between $225 million and $240 million, though it still expects an adjusted EBITDA loss of $20 million to $26 million. Adjusted EBITDA, a non-GAAP metric that strips out certain items, remains a key focus for investors evaluating operational performance.
Catalysts on the Horizon
Investors are now looking ahead to several catalysts. The June 22 index inclusion date could trigger additional buying from passive funds. Meanwhile, Rocket Lab's launch schedule includes the "Ten Owl Of Ten" Electron mission for Synspective, set for on or after June 17, and another Electron launch for iQPS later in the month. The bigger operational milestone is Neutron, the company's medium-lift reusable rocket, which is slated for its first flight later this year.
Bulls point to the company's accelerating revenue growth, substantial backlog, and strong demand from commercial, defense, and national-security customers. The Nasdaq-100 inclusion could further broaden Rocket Lab's investor base as it expands its capabilities from the workhorse Electron to space systems, hypersonics, and the larger Neutron platform.
Valuation Concerns Remain
Despite the positive news, bears highlight significant risks. Rocket Lab's market capitalization stands at approximately $66.43 billion, with a price-to-sales ratio of 110.38—a level that implies investors are pricing in substantial future growth. The company is not yet profitable on a net-income basis and continues to forecast an adjusted EBITDA loss for the second quarter. Additionally, the consensus analyst price target is $99.24, roughly 13.5% below Thursday's closing price.
The stock's recent rally, driven by index inclusion, may already price in many of the positives. For the momentum to sustain, Rocket Lab will need to execute on its launch schedule, convert its backlog into revenue, and successfully deliver Neutron. Chasing the stock at current levels means betting that index demand, operational progress, and backlog conversion can outweigh the high valuation and potential for delays.
