In August, U.S. tech stocks experienced a sharp decline, partly due to a report from MIT highlighting the emerging risks of an AI bubble, and partly due to market concerns over Federal Reserve Chairman Jerome Powell signaling hawkish stances at the global central bank meeting. Many tech stocks have retraced more than 20%. In such a bearish market, there are typically both winners and losers. For fellow investors waiting for an entry opportunity, this might present a chance to pick up some bargains!

For instance, I have been closely monitoring Rocket Lab, which has doubled in value since the beginning of the year but has retracted over 20% in the past month. Could this be a good opportunity to buy at a lower price? What growth metrics should we pay attention to? This week, "Opportunity Express" will share insights.

A small but formidable aerospace challenger

When discussing the stars of the aerospace sector, the first name that comes to mind is Elon Musk's SpaceX, the absolute leader in the field. However, Rocket Lab can be described as a "small but precise" aerospace challenger; it is a very interesting company. Its founder, Peter Beck, has been a passionate rocket enthusiast since childhood, modifying old cars and launching water rockets as a teenager. Peter even did not attend university, instead teaching himself in the workshop and conducting experiments with rockets and propellants, gradually accumulating knowledge about rocket materials and manufacturing experience.

In 2006, Peter Beck officially founded Rocket Lab, recognizing that the future of satellites would trend towards miniaturization. The market required more frequent and lower-cost small launch vehicles to provide launch services for small satellites, which set Rocket Lab on a differentiated path from SpaceX.

While SpaceX has focused on launching large rockets, such as the Starship, which stands at 123 meters tall with a payload capacity of over 100 tons, Rocket Lab's most representative small rocket, Electron, is only 18 meters tall with a payload capacity of approximately 300 kilograms. Peter once likened Electron to creating "FedEx" for the space sector, being both flexible and efficient.

Since its listing in 2021, Rocket Lab (RKLB) has steadily advanced in the small rocket launch sector, successfully securing numerous contracts with the National Aeronautics and Space Administration (NASA) and the Department of Defense, among others, and is now one of the global leaders in the small satellite launch market.

At this stage, RKLB has two relatively mature business segments: rocket launch services and space systems.

Small Rocket Launch Leader

The first business is the market-validated 'rocket launch service,' primarily relying on the 'Electron' rocket.

Electron is an exceptionally lightweight small rocket with a maximum payload of only 300 kilograms. Since its first launch in 2017, Electron has executed 64 launch missions, delivering over 200 spacecraft into orbit for government and commercial clients. Its launch frequency is second only to SpaceX's Falcon 9, with a historical launch success rate exceeding 92%.

Starting in 2022, RKLB can build approximately 11-14 Electron launch vehicles each year, averaging over 10 launches annually. Currently, the revenue per launch of the Electron small rocket is approximately 7-8 million USD, with launch costs around 5 million USD. Profitability hinges on launch frequency and the recovery and reuse of rockets; higher launch frequency can dilute fixed costs and generate cash flow more rapidly, while the ability to recover and reuse rockets significantly reduces hardware costs. RKLB is still striving to explore the feasibility of recovering the first stage of the Electron rocket.

From the financial report, the revenue contribution from 'rocket launch services' accounts for about 30%, while the core revenue predominantly comes from space systems, representing around 70%.

On a quarterly basis, revenue from rocket launch services is strongly correlated with order contracts. While revenue is not entirely stable, there is an overall upward trend in growth.

In Q2 2025, revenue from rocket launches reached 46.65 million USD, reflecting a year-on-year increase of 59%. This growth was attributed to the completion of five rocket launch missions during Q2, one more than the same period last year, alongside increased revenue per launch mission, leading to a substantial rise in overall revenue.

Neutron Rocket: The Key to Future Growth

In addition to Electron, the major highlight for Rocket Lab (RKLB) is the development of the Neutron rocket, which is 43 meters tall, has a low Earth orbit payload capacity of 1.3 tons, and is reusable.

Neutron targets the medium to large satellite and constellation launch market, with its first mission expected to take place by the end of this year, executing a return-to-Earth launch mission for the United States Air Force Research Laboratory. Although Neutron is not yet fully developed, it has already received orders totaling $29.35 million, including over $100 million from the U.S. Air Force.

If the Neutron launch is successful, it will fill the gap between light and heavy rockets and will also serve as a catalyst for stock price increases.

The second area of business is the more profitable and rapidly growing 'Space Systems,' which refers to the so-called end-to-end services.

The Space Systems division offers a wide range of services. This primarily includes satellite design and manufacturing, creating bespoke satellites for government and corporate clients; as well as on-orbit management and operations, collecting various sample data for clients and transmitting the data back to them.

Rocket Lab (RKLB) has already served multiple clients, including designing and delivering 18 data relay satellites for the U.S. Space Development Agency, constructing spacecraft for NASA, building 17 satellites for Globalstar Satellite Communications, and assisting Varda Space Industries with space pharmaceutical missions, among others.

As a revenue pillar for RKLB, Space Systems contributed 68% of revenue in Q2 2025, amounting to $97.9 million, a year-on-year increase of 27%, with a gross margin of 32%. The revenue growth in Q2 is attributed to an increase in aerospace manufacturing, further validating RKLB's irreplaceability in space services.

Key factors influencing stock prices

Acquisition of Geost strengthens industry position.

This year, Rocket Lab completed the acquisition of Geost, a leading developer of electro-optical and infrared (EO/IR) sensor systems. Its technology supports missile warning and tracking, tactical intelligence, surveillance, reconnaissance, ground observation, and space situational awareness, all of which are crucial capabilities for the operation of U.S. space assets in an increasingly competitive environment.

This acquisition provides Rocket Lab with mature sensor technology, ensuring its position as a disruptive prime contractor for next-generation defense programs, such as Golden Dome and the Space Development Agency's proliferated operations architecture. Future synergies may become significant factors in driving revenue growth and increasing stock prices.

In line with national security development strategy.

Space has become a critical area for national security. Rocket Lab's growth aligns with the United States' demand for a domestic space supply chain amid escalating geopolitical competition, representing a key advantage in securing sensitive contracts with the U.S. government and national security.

At the same time, the space economy is projected to grow from $630 billion in 2023 to $1.8 trillion by 2035. Rocket Lab has already established a strong reputation in the small rocket launch market, and with breakthroughs in the Neutron rocket and improvements across the overall space value chain, it is poised to become a formidable competitor to SpaceX, likely capturing a share of the expanding space economy.

Based on the analysis above, we have gained insight into Rocket Lab's business development and expectations. Its growth points are worth long-term tracking by investors. For more information on space-related stocks, you may review the course 'What other space stocks are expected to take off in the Trump 2.0 era?'In the Trump 2.0 era, which space stocks are expected to take off?》。

Technical Trading Opportunities

Short-term trading opportunities can be referenced through candlestick patterns. Rocket Lab has retracted approximately 20% from its high of $53.

Combined with the EMA50 trend line, the stock price is expected to find effective support around $40; further observation of the MACD and RSI (value 40) technical indicators also signals stabilization. However, the biggest risk at the moment lies in the market's direction, as Jerome Powell will deliver a speech on August 22 regarding the September monetary policy. If he maintains a hawkish stance, it may trigger market volatility. Therefore, fellow investors should manage their positions prudently and set timely profit-taking and stop-loss points.

Lastly, in addition to trading the underlying stock, fellow investors may also consider opportunities in ETFs and options trading.

For example, the 2x leveraged ETF RKLX for Rocket Lab can help us achieve double returns during an upward trend; however, in the event of a downturn, it will also incur double losses. Thus, such leveraged ETFs are suitable for fellow investors with a higher risk tolerance!

Similarly, options are also suitable for fellow investors with a higher risk appetite. If you are optimistic about the market's future direction, you can directly purchase call options; alternatively, you can employ a short put strategy. If the stock price rises, we can enjoy receiving the option premium, and if it falls, we can choose to buy the stock. Of course, engaging in a short put is a relatively speculative strategy, and it is best to maintain sufficient cash in the account to avoid unforeseen circumstances.

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