Rocket Lab Braces for Q1 Earnings Amid Soaring Expectations

Key Points

• Rocket Lab’s first-quarter 2025 earnings report on May 8 comes amid high expectations, mixed sentiment, and significant short interest.
• Rocket Lab’s stock has shown resilience despite recent market struggles, maintaining support above key moving averages.
• Investors will focus on revenue growth, Neutron rocket progress, and the company’s ability to manage cash flow and expand its contract backlog.

Rocket Lab USA NASDAQ: RKLB, a rising force in the aerospace sector, is set to report its first-quarter 2025 earnings on May 8. This earnings release is shaping to be one of the company’s most pivotal, with expectations running high amid growing momentum in government contracts and space systems.

The sentiment heading of the report is fairly mixed. While analyst ratings remain broadly bullish, estimates for the upcoming quarter reflect some caution, leaving room for volatility depending on the results and forward guidance.

Stock Holds Up Amid Market Weakness

Shares of RKLB have struggled slightly year-to-date but continue to outperform many peers within the space and satellite industry. Notably, the stock has maintained a steady position above its 200-day moving average throughout the recent market pullback and, as of Thursday’s close, was trading above all key short-term and long-term moving averages.

This technical strength in a challenging macro environment reflects steady support and a lack of persistent selling pressure. However, the upcoming earnings could act as a catalyst, either confirming investor confidence or challenging the current bullish positioning.

Expectations for Q1: Revenue, Margins, and Guidance

Wall Street expects Rocket Lab to post revenue of $121.4 million, representing a 30% increase from the same quarter a year ago. Earnings per share are forecasted to show a loss between $0.11 and $0.12. While the revenue growth rate remains strong, the company’s guidance for Q1, ranging from $117 million to $123 million, came in slightly under consensus on the low end. That makes a revenue beat particularly important for investor sentiment.

The company previously projected gross margins in the 30% to 32% range for this quarter, and any improvement on that front could help offset ongoing losses and improve confidence in its long-term profitability trajectory.

All Eyes on Neutron and Execution

One of the most critical areas for investors to watch will be updates on the Neutron rocket, Rocket Lab’s next-generation launch vehicle aimed at capturing a larger share of the medium-lift market. The first launch is targeted for the second half of 2025, and any concrete progress, such as successful engine testing, new contracts, or infrastructure milestones, would be viewed as a positive signal that the timeline remains on track.

On the other hand, signs of delays or unexpected challenges could raise concerns and potentially spark selling, especially considering the stock's valuation. Rocket Lab currently trades at a price-to-book ratio of 29 and a price-to-sales ratio of over 23, metrics that leave little room for execution missteps.

Contract Backlog and Cash Burn in Focus

Investors will also pay close attention to Rocket Lab’s contract backlog and cash flow management. As of Q4 2024, the backlog stood at $1.06 billion, with $681 million attributed to the rapidly growing space systems segment. A steady expansion of this backlog, particularly through new government or defense contracts, could help reinforce the growth narrative.

However, as the company remains unprofitable, any signs of deteriorating cash flow or lack of discipline in spending could weigh heavily on the stock.

Defense Momentum Strengthens with Recent Wins

Rocket Lab heads into earnings with growing momentum in the aerospace sector. The company was tapped to launch the first full-scale hypersonic test flight under the Department of Defense’s $1.45 billion MACH-TB 2.0 initiative. Set to fly no earlier than Q1 2026 using its HASTE rocket, this win underscores Rocket Lab’s role in cutting-edge hypersonic testing.

RKLB was also added to the U.S. Air Force’s $46 billion EWAAC program and selected for the U.K. Ministry of Defence’s £1 billion hypersonic development framework, significantly expanding its access to major defense contracts across both markets.

A High-Stakes Report for a High-Growth Stock

With strong tailwinds from recent contract wins, a growing space systems business, and high expectations for continued execution, Rocket Lab enters earnings with momentum, but also pressure.

The May 8 report will be pivotal in determining whether the company can continue defying skeptics and justify its premium valuation or if investors need to recalibrate their expectations.