Rocket Lab has taken off this year and is in a consolidation pattern. Wednesday's pick for IBD 50 Growth Stocks To Watch reversed lower after initially rising to start the session. But the rocket launch stock now is holding above a key moving average.
Rocket Lab was discussed on Wednesday's episode of IBD Live. The IBD 50 stock is also an IBD Leaderboard Watchlist name and was a recent IBD SwingTrader position.
The Long Beach, Calif.-based firm develops and manufactures space vehicles and satellites, space software and components. It also provides launch services. It has had 70 launches, operates three launchpads and has 233 satellites deployed.
Its most recent launch was in late August, involving a takeoff from its New Zealand launch pad.
It developed a small launch vehicle named Electron. The company's small and medium class spacecraft support commercial, civil and defense markets.
It is developing a large spacecraft vehicle called Neutron. Its Electron and Neutron vehicles are designed with reusable parts.
The rocket launch company also has its sights on missions to Mars and Venus.
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Rocket Lab Stock Retreats In A Base
Rocket Lab was giving back more than 7% Wednesday, following three straight days of gains. The stock is pulling back near its 21-day exponential moving average but holding above its 50-day moving average.
The stock is in an early-stage consolidation pattern with a 53.44 buy point, according to MarketSurge pattern recognition. The stock can show big daily swings, as reflected in its 21-day Average True Range of 7.4%. Investor's Business Daily normally seeks names with an ATR of 5% or less.
But Rocket Lab stock also holds a best-possible 99 IBD Relative Strength Rating and has climbed around 81% so far this year.
Its IBD Accumulation/Distribution Rating of A+ indicates very heavy institutional buying over the last 13 weeks. And its volume has spiked on rising days, as big money managers scoop up shares.
Mutual funds have added shares for four straight quarters, according to IBD Stock Checkup, with 540 funds owning Rocket Lab stock in June.
Moreover, five IBD Mutual Fund Index names owned shares as of June, including Fidelity Contrafund. And its 1.5 up/down volume ratio shows positive demand over the last 50 days.
Lastly, management owns 11% of Rocket Lab stock, showing conviction in the name.
Rocket Lab Sees Record Revenue
Rocket Lab reported record revenue of $144.5 million in the second quarter, or 36% growth. The company is not yet profitable but its losses are expected to wane.
It's second-quarter loss of 13 cents a share was its highest in eight quarters. But analysts call for a loss of eight cents a share in the third quarter, then improving that deficit to three cents a share over the next four quarters.
Analysts forecast a loss of 43 cents a share for full-year 2025. Wall Street sees that trimming down to nine cents a share in 2026.
"We're confident our strategic investments will drive new growth opportunities that will drive us toward long-term profitability, particularly as we guide toward another potential record quarter for Q3," Rocket Lab Chief Executive Peter Beck said in the company's earnings release. Beck is also the company founder.
The rocket launch company expects third-quarter revenue between $145 million and $155 million.
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