Rocket Lab enters coverage at Watchlist, with shares at $72.57. The company is executing well. The share price already assumes it will keep doing so.

The bull case is straightforward. Second-quarter revenue reached a record $234 million, up 62% year over year. Gross margin widened to 36.2% from 32.1%. The net loss narrowed to $49.3 million from $66.4 million, and adjusted EBITDA loss of $8.8 million came in ahead of guidance, putting break-even within sight. Backlog jumped 137% to $2.36 billion, and management guided third-quarter revenue to $250-265 million against a $238 million consensus. Recent awards include a $397 million US Space Force contract and a $266 million missile-defence deal, which say something durable about a customer that wants a credible second supplier to SpaceX. The balance sheet holds $2.4 billion of total liquidity.

The bear case is about price, and about one word in the earnings call. At $72.57 the enterprise value is roughly $41.8 billion against $769 million of trailing revenue. That is about 54 times sales, or 41 times if third-quarter guidance is annualised. For comparison, that multiple usually belongs to software companies with 80% gross margins. Rocket Lab earns 36% and builds hardware.

Then there is the composition of the growth. Within that 62% increase, launch revenue grew roughly 1.8%. Essentially all the expansion came from Space Systems and from the Mynaric and Motiv acquisitions. The scarce asset, orbital launch, is the flat one.

Neutron is meant to fix that by carrying Rocket Lab into the medium-lift market where the real money sits. On the second-quarter call management committed to having the vehicle on the pad in the fourth quarter of 2026 and declined to promise a maiden flight before year-end. That refusal is honest and it is also the whole problem: a rocket on a pad is not a rocket that has flown, and first flights slip as a rule.

The $8 billion Iridium acquisition, expected to close mid-2027 with $3.6 billion of bridge financing, adds a genuinely useful recurring revenue stream and converts a clean balance sheet into a leveraged one at the same time.

Scenario work puts probability-weighted fair value at $76.25, about 5% above the current price. The shares have already fallen 52% from their May peak, which removed the froth without creating a discount. A successful Neutron flight, or a price nearer $55, would change the arithmetic.

The full scorecard, valuation detail and scenario table are in the complete Rocket Lab (RKLB) report on our Reports page.