Shares of small space rocket company Rocket Lab (RKLB 11.44%) slid 8.2% through 10:10 a.m. Tuesday after "missing" on sales and "beating" on earnings (although I use both those terms loosely) last night.
Analysts forecast the manufacturer of Electron rockets would lose $0.11 per share on sales of $95 million in the first quarter of 2024. In fact, the company reported a loss of only $0.09 per share (but still a loss) and sales of only $92.7 million (but still 69% year-over-year growth)!
NASDAQ: RKLB
Key Data Points
Rocket Lab Q1 earnings
So, the news was both worse and better than expected. Worse because Rocket Lab only "beat" earnings by losing less money than Wall Street feared, and better because, while its sales weren't as great as anticipated, they were still pretty great.
And how did Rocket Lab grow revenues by 69%? Well, it launched more rockets. In Q1 last year, Rocket Lab launched thrice. This year, Q1 saw a total of four launches, putting the company on pace to outgrow SpaceX this year. The company also advanced its work on two big satellite construction contracts, a 17-satellite build for MDA and Globalstar and an even more important 18-satellite project for the U.S. Space Force, worth $515 million to Rocket Lab.
Is Rocket Lab stock a buy?
And Rocket Lab intends to grow even faster in the future. Guidance for Q2 foresees revenue rising to between $105 million and $110 million. So, even the low end of guidance implies continued 69% sales growth, and if Rocket Lab hits the high end, it could grow 77%.
Granted, the bad news is that this growth still won't make Rocket Lab profitable. With gross profit margins of only about 25% but operating margins of negative 50%, it's pretty much guaranteed that Rocket Lab will keep losing money in Q2. In fact, most analysts don't see the company turning a profit before 2026.
A value stock, Rocket Lab is not (yet). It's a growth stock -- or it's nothing.
