Rocket Lab (NASDAQ:RKLB) might be one of the market’s strongest performers over the past year, but it looks like one of its prominent backers has now decided to pocket some returns.
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Ark Invest CEO Cathie Wood famously has a penchant for ground-breaking and cutting-edge stocks, a description that’s fitting for the space company. However, so far in May, via her ARKX and ARKQ ETFs, Wood has sold 365,680 RKLB shares.
Why exactly Wood has decided now is the right time to offload these holdings is unknown, but it’s fair to assume she thinks the stock has rallied enough for now. After all, RKLB shares have surged by 386% over the past 12 months.
Generally speaking, with Elon Musk’s SpaceX set to go public next month, space stocks are generating plenty of hype, with Rocket Lab itself considered something of a mini-SpaceX.
However, Rocket Lab’s share gains have not been built solely on hype. Its recent Q1 report had plenty for investors to savor.
The company not only exceeded expectations on both its results and guidance but also secured record launch agreements during the quarter. In March, Rocket Lab revealed it had been awarded a $190 million contract under MACH-TB to carry out 20 HASTE missions over the next four years, marking the largest launch deal in the company’s history at that point. That milestone was quickly surpassed when it later entered into a new record agreement with a confidential commercial client covering a bulk purchase of dedicated Neutron (5) and Electron (3) missions. As a result, the company’s total launch manifest expanded to more than 70 missions, while its overall backlog grew to over $2.2 billion.
At the same time, hypersonic testing continues to represent an important and expanding part of the business. Approximately one-third of the more than 70 missions currently in the backlog are tied to the suborbital launch vehicle HASTE. Although most of these are connected to MACH-TB, the company also secured a separate $30 million agreement directly with Anduril for three HASTE missions intended to showcase Anduril’s payload capabilities.
BTIG’s Andre Madrid, an analyst ranked among the top 4% on Wall Street, thinks that direct agreements with commercial customers such as Anduril could help Rocket Lab increase the pace of hypersonic testing operations. In addition to demand from the U.S. government and commercial clients, Rocket Lab said it is also seeing interest from allied countries, including the UK and Australia, potentially broadening HASTE’s TAM (total addressable market).
However, while the Neutron – Rocket Lab’s next-generation, reusable medium-lift launch vehicle – test launch is still expected by the end of the year, given the program’s repeated delays, Madrid thinks execution risk remains.
Additionally, as Cathie Wood has probably considered, the stock is far from cheap. “RKLB currently trades at a 78x 2026 EV/Sales multiple (vs. peer average mid- to high-teens),” the 5-star analyst said. “While it should trade ahead of peers, we remain cautious at these levels.”
To this end, Madrid has a Neutral rating on RKLB stock, with no fixed price target in mind. (To watch Madrid’s track record, click here)
3 other analysts also take a cautious stance here, although with an additional 11 Buys, the analyst consensus rates the stock a Moderate Buy. That said, the $100.17 average price target now sits 20% below the current share price. Considering this gap, watch out for either price target hikes or rating downgrades shortly. (See RKLB stock forecast)
Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.