Rocket Lab: I Am Selling Half Of My Position After Investing At $6
Rocket Lab has secured its largest contract to date—a deal worth $816 million with the US Space Development Agency (SDA). The agreement, signed on 19 December, marks the first time the company has been named a prime contractor, placing it alongside industry giants like Lockheed Martin and Northrop Grumman. This milestone follows years of strategic growth and acquisitions aimed at boosting the firm’s capabilities in satellite production.
The SDA contract requires Rocket Lab to deliver end-to-end production of small satellites for the US military’s proliferated low-earth orbit constellation. To meet these demands, the company has integrated technology from three recent acquisitions: SolAero, Advanced Solutions, and Sinclair Interplanetary. These firms specialise in spacecraft components, avionics, and satellite subsystems, enabling Rocket Lab to streamline its vertical integration.
The deal has significantly impacted the company’s market position. An early investor who bought shares in late 2023 has seen gains exceeding 1,200% based on yesterday’s closing price. However, despite this success, the investor has shifted their rating from 'Buy' to 'Hold' and sold half their stake. The decision comes as Rocket Lab’s valuation soars, with a market cap of $38 billion and a forward price-to-sales ratio of 62x—far above its previous share price of $6. Rocket Lab’s rapid expansion and high-profile contract underscore its growing role in the aerospace sector. Yet, the steep valuation has led some to reassess their long-term positions, even as confidence in the company’s disruptive potential remains strong.
The $816 million SDA contract solidifies Rocket Lab’s place among top defence contractors. With integrated technology from its acquisitions, the company is now equipped to fulfil complex military satellite requirements. While its valuation raises questions about affordability, the deal confirms its expanding influence in the space industry.
