The commercialization of outer space is now in full swing, and many startup companies have emerged to support the young but promising space economy.
Two of these businesses that stand out as potentially interesting investments are Rocket Lab USA (NASDAQ:RKLB) and Intuitive Machines (NASDAQ:LUNR).
Today, let’s compare Rocket Lab and Intuitive Machines to see which stock could be the better buy for long-term growth.
Rocket Lab USA
Rocket Lab is a young space startup that is gradually positioning itself to compete directly with SpaceX in the commercial space vehicle industry. Its Electron rocket is a small two-stage vehicle used mostly to put small satellites into orbit. Electron is currently the second-most launched rocket in the commercial space field and has put 224 satellites in orbit to date.
A larger rocket called Neutron that appears to be a direct competitor to the SpaceX Falcon 9 is also set to roll out soon. This rocket has already been selected for missions by NASA and the US Space Force.
Though Neutron hasn’t yet launched, the company expects to have its first launch sometime in the second half of this year. Management also plans to increase the number of launches it can perform by converting an ocean barge into an offshore landing platform. Once up and running, Neutron could be a go-to solution for companies and government agencies looking to put satellites in orbit.
RKLB is currently experiencing extremely rapid growth. 2024’s full-year results showed revenues of $436.2 million, compared to just $244.6 million in 2023. Although the company still hasn’t reached profitability, net loss per share remained flat at ($0.38). It managed 16 Electron launches in 2024, an increase of 60 from the year before.
The company also introduced a new small satellite dubbed Flatellite last year. These satellites can be launched at scale to produce constellations for a wide range of applications. These satellites could create substantial value for the company, especially as more companies look for affordable space infrastructure options. Importantly, the Flatellite can be mass-produced and stacked to maximize the number of satellites deployed per launch.
Rocket Lab has been by far the winner between the two over the last year, having appreciated by over 450%. This, however, has increased the stock’s price-to-sales ratio to an astronomical 22.4 with no earnings. Despite this, analyst price forecasts don’t seem to yet view the stock as fully-valued. The consensus price target for RKLB is $24.32, which would still imply an upside of 23.2% from the last close of $19.74.
Intuitive Machines
While Rocket Lab specializes in putting satellites in orbit, Intuitive Machines has the rather more ambitious business strategy of specializing in lunar deliveries. The company has developed a range of cargo landers and surface mobility vehicles that can work in tandem for scientific and commercial purposes on the moon’s surface.
A good example of the company’s technology in action came last month when Intuitive Machines pulled off the southernmost lunar landing to date. The company dropped a lunar lander called Athena near the moon’s south pole.
Though the lander tipped over onto its side and was prevented from recharging properly due to the orientation of its solar panels after the fall, the fact that Intuitive Machines accomplished this feat at all is impressive in and of itself.
While its revenues are much smaller than Rocket Lab’s, Intuitive Machines delivered an even higher rate of revenue growth in 2024. For the full year, revenue totaled $228.0 million, almost three times the 2023 result of $79.6 million. The company’s backlog also expanded more than 20% to reach $328.3 million. Last year also saw the company receive new contracts from NASA, a key customer for the early part of its business growth.
In terms of valuation, Intuitive Machines is something of an opposite to Rocket Lab. Despite the higher revenue growth rate, LUNR is only trading at 2.1 times its trailing 12-month sales. Analysts, however, seem to view Intuitive Machines as being significantly more undervalued than Rocket Lab. The average price target for the stock is $14.86, a nearly exact doubling from the last price of $7.45
Rocket Lab Vs Intuitive Machines Stock
On a pure valuation basis, one might expect that Intuitive Machines would stand out as the better buy between RKLB and LUNR. After all, the company trades at a much lower valuation and its revenues are growing more quickly. Before rushing to that conclusion, however, we need to take into account a few factors related to these businesses.
Rocket Lab is in an extremely interesting position, moving as it is to compete directly with SpaceX as the Neutron rocket rolls out. Though SpaceX is the uncontested major when it comes to private space launches, Rocket Lab may very well carve out a niche for itself as both governments and commercial customers seek alternatives to what was previously an effective monopoly.
Rocket Lab is also engaged in the increasingly high-demand business of launching satellites, something that will likely be a predictable revenue source for the foreseeable future.
Intuitive Machines is carving out a niche that’s still pretty far from turning into a fully commercial business, at least beyond its work with NASA. And while NASA is a fantastic partner, any future budget cuts could put a dent in those exploration plans. The company has been involved in some futuristic ideas, like building lunar data centers, which might eventually turn into real money-makers. But for now, the reality is that commercial activity on the moon is likely still years, if not decades, away.
With this context in mind, Rocket Lab appears to emerge as the better buy despite its premium price tag. Intuitive Machines’ lunar business may have limits imposed on it by NASA’s willingness and ability to allocate funding to projects on the moon. Rocket Lab, meanwhile, has a much more diversified customer base and is engaged in a more predictable business. Although both businesses carry their fair share of risk as young startups that haven’t yet achieved profitability, Rocket Lab appears to be the safer of the two companies to invest in at the moment.
The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.