Why Rocket Lab Stock Keeps Going Up

Continuing its recovery from last Thursday's sudden sell-off, Rocket Lab (NASDAQ: RKLB) stock rose for a third straight day in early Tuesday trading, tacking on 4.1% through 10:10 a.m. ET. You can thank CEO Sir Peter Beck for that.

A well-timed Twitter post

Late last night (our time -- I think it was a morning post in New Zealand ), the Rocket Lab CEO posted on X the observation that he's really happy that his company is now mass producing and shipping satellite parts (known as "reaction wheels") to its satellite-building customers by the pallet load.

Love that we now ship pallets of reaction wheels to constellation customers. pic.twitter.com/Og3gVkcVuA

-- Peter Beck (@Peter_J_Beck) November 19, 2024

Is this a bit of shameless self-promotion by the space company CEO? Perhaps. But investors in Rocket Lab stock should be pleased, regardless, because Beck is making an important point.

Why to buy Rocket Lab stock -- if you decide to buy Rocket Lab stock

As the name implies, Rocket Lab is best-known as a rocket stock. Its Electron rockets launch more frequently than any other U.S. rocket save for SpaceX's Falcon 9, and the company has a new Neutron medium-lift vehicle on the way, which will begin launching in 2025. As the cadence of rocket launches accelerates, Rocket Lab's revenue grows and its profile increases.

According to S&P Global Market Intelligence data, though, Rocket Lab earned only an 11% gross profit margin on its rocket launches last year. It earned 25% on its sales of space systems, which include everything from spacecraft and satellites all the way down to spacecraft parts it sells to other satellite manufacturers.

Parts like reaction wheels. And now those profits are coming in by the pallet load.

Analysts who track the stock still don't expect Rocket Lab to earn its first net profit until 2027. But the more reaction wheels, whole satellites, and rocket launches Rocket Lab sells, the closer this company will get to profitability.

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Rich Smith has positions in Rocket Lab USA. The Motley Fool recommends Rocket Lab USA. The Motley Fool has a disclosure policy.