Rocket Lab (RKLB) Could Be 6% Undervalued On Its Latest Equity Funding Move

Rocket Lab (RKLB) has moved back into focus after disclosing a large at-the-market follow-on equity program of up to US$1.94b, alongside completing US$1.06b of common stock sales.

See our latest analysis for Rocket Lab.

For Rocket Lab, the latest at-the-market equity plan and recent stock sales come after a sharp share price decline of around 36% over the past 90 days, even as the 1 year total shareholder return is 87% and the 5 year total shareholder return is about 7x. This combination points to strong long term gains but fading short term momentum as investors reassess funding, acquisition plans and Neutron timing.

If you are looking at how this funding story fits into the wider space sector, it can be useful to scan other launch and satellite players through our screener of 55 AI infrastructure stocks

Rocket Lab now trades well below both its average analyst target and a set of intrinsic value estimates, and the recent pullback has widened that gap. So where does fair value really sit after this funding move and acquisition push?

Most Popular Narrative: 5.8% Undervalued

The most followed narrative on Rocket Lab pegs fair value at $85 per share, compared with the last close of $80.10. This frames the latest equity raise against a still supportive valuation backdrop.

Rocket Lab is mid-transformation from a small-launch specialist into a vertically integrated space and defense prime, with Space Systems now ~67% of revenue and growing fastest.

A $1.85B backlog (+73% YoY) anchored by the $816M SDA Tranche 3 award provides multi-year revenue visibility that the current trailing P/S of ~72x does not yet fully reflect.

Read the complete narrative. Read the complete narrative.

Want to understand why this fair value sits above today’s price? The narrative leans heavily on future revenue ramps, rising margins and a higher cash flow profile. The full story is in how these pieces work together over time.

Result: Fair Value of $85 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, Rocket Lab’s story still hinges on Neutron execution and timely SDA contract delivery, and any setback here could quickly challenge this 5.8% undervalued narrative.

Find out about the key risks to this Rocket Lab narrative.

Next Steps

Given the mix of optimism and caution around Rocket Lab, it makes sense to move quickly, test the numbers for yourself, and then weigh up the 2 key rewards and 3 important warning signs.

Looking for more investment ideas beyond Rocket Lab?

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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