Earlier this year, Vector Acquisition Corp (NASDAQ: VACQ) announced a reverse merger with aerospace company Rocket Lab. Rocket Lab is an end to end, aerospace manufacturer and small satellite launch service operating from Longbeach, California. On 20th August, VACQ shareholders approved of the merger and the company will begin trading on the 25th of August.
With the merger now in its final stages, investors are asking what the outlook is for Rocket Lab stock. This article will breakdown everything investors need to know about the Rocket Lab stock forecast over the next 5 years.
Why are investors excited about Rocket Lab stock?
In the history of spaceflight, Rocket Lab is one of only two private companies that have delivered regular and reliable access to orbit. The other company in this tier is Elon Musk’s aerospace company, SpaceX. The proposed merger has now been approved by shareholders and the combined company is expected to debut on 25 August under the ticker NASDAQ:RKLB.
The approved merger transaction will provide Rocket Lab an infusion of capital to fund the development of a reusable Neutron launch vehicle. The vehicle is tailored for mega constellations, deep space missions and human spaceflight.
The cash proceeds will also help fund growth in the space systems and applications market, enabling Rocket Lab to deliver data/services from space. The space systems and applications industry is expected to grow to $1.4 trillion by 2030.
“Rocket Lab is ideally positioned to continue to capture market share in the rapidly expanding space launch, systems and applications markets.”
Rocket Lab stock forecast
Firstly, Rocket Lab has completed 18 seperate missions and launched 97 satellites to date. Rocket Lab have highlighted key growth catalysts which have excited investors. This includes the companies aggressive expansion into the Space Systems business alongside revenue visibility with missions scheduled to the Moon and Mars for NASA.
Rocket Lab expects to generate $749 Million in revenue by 2025
If we breakdown the financial outlook, Rocket Lab expects to generate $69 million in revenue in 2021 (96% YOY growth). In the following year, the company expects revenue to almost triple to $176 million. Looking long term, Rocket Lab forecasts revenue to reach upwards of $749 million by 2025 based on their forecasting models.
So what exactly is driving this exponential growth in forecasted revenue? Rocket Lab highlighted the “historic levels of demand for responsive small satellite launch and constellation deployments”. In addition, there has been strong demand for commercial Earth observation and telecom applications. This mega-trend has not gone unnoticed by Wallstreet and investors are excited about the potential of aerospace companies such as Virgin Galactic.
Understanding the risks with Rocket Lab stock
The 5 year outlook on revenue according to Rocket Lab looks bullish, however the risk in the evolving aerospace industry remains high. For Rocket Lab to meet these forecasts, they will need to ensure assumptions regarding expansion into the space systems and applications industry is successful. In saying this, its space systems business already has scheduled missions to the Moon in 2021 and Mars in 2024 providing investors with some visibility.
The bottom line – Rocket Lab stock forecast
In conclusion, the completed merger between VACQ and RocketLab looks to provide an exciting new chapter for investors. Furthermore, the funds raised from the transaction will allow for expansion into the space systems and applications market.
The revenue forecasts as discussed suggest strong growth in both the launch and space systems industry. However, investors should tread with caution as many hurdles will need to be cleared by the company due to the nature of its emerging industry.
Written by Tyger Fitzpatrick
The information above is not financial advice. Youth Investment Group has no liability for personal financial interests or investment decisions. You should make your own investment decisions based upon your own research and what you believe is best for you.
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