Is Rocket Lab Stock A Buy At $85?

Rocket Lab stock (RKLB) has been on fire lately—up 67% in just a month. Should you jump in now, or is this party getting too expensive? Let’s break it down. Why is everyone suddenly excited about RKLB? Three big reasons. First, SpaceX is reportedly eyeing a $1.5 trillion IPO in 2026, which has investors dreaming about the entire commercial space sector. Second, Rocket Lab itself has been executing brilliantly—a perfect 100% mission success rate across 21 Electron launches in 2025. Third, they just landed a massive $805 million contract from the U.S. Space Development Agency. Add in positive progress on their larger Neutron rocket (expected to debut in 2026), and you’ve got a compelling growth story.

So, is RKLB stock a buy at levels of $85? We don’t think so, given its lofty valuations. Before we dive into the details, if you seek an upside with less volatility than holding an individual stock, consider the High Quality Portfolio. It has comfortably outperformed its benchmark—a combination of the S&P 500, Russell, and S&P MidCap indexes—and has achieved returns exceeding 105% since its inception. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride, as evident in HQ Portfolio performance metrics.

Image by WikiImages from Pixabay

Here’s the Problem: Valuation

So what’s the catch?

The stock is expensive. Really expensive. At $86, RKLB trades at 80 times sales. The S&P 500? Just 3.3 times. Even if you look forward to 2026 revenues—expected to jump 47%—you’re still paying 50 times sales.

Isn’t growth worth paying up for?

Sometimes, yes. Rocket Lab’s revenue growth is genuinely impressive—up 44% annually over three years and 52% over the last twelve months. That’s roughly 8 times faster than the S&P 500. Their quarterly revenue hit $155 million, up 48% year-over-year. The growth story is real.

Then why not buy?

Because they’re hemorrhaging cash. Operating losses of $229 million translate to a -41% operating margin. They burned $103 million in operating cash flow. Net losses hit $198 million. While the S&P 500 generates healthy 13-19% profit margins, Rocket Lab is deeply unprofitable.

The Bull Case Still Exists

What are investors betting on? The Neutron rocket. If it succeeds, Rocket Lab could capture meaningful market share in medium-to-heavy payload launches—a much larger addressable market than their current small-satellite focus. Plus, the SpaceX IPO could create valuation expansion across the entire sector, lifting all boats.

Isn’t that worth the premium?

Maybe. But you’re paying today for earnings that might materialize years from now. At 50 times forward sales, there’s little margin for error. Any delay in Neutron’s development, contract losses, or execution stumbles could trigger a sharp correction.

Financial Health: The Silver Lining

Is the balance sheet at least solid? Actually, yes. This is one bright spot. Rocket Lab has $977 million in cash against just $517 million in debt—a debt-to-equity ratio of 1.2% versus 20% for the S&P 500. With 44% of assets in cash, they have significant financial flexibility to fund operations and development.

How does the stock perform in downturns?

Mixed. During the 2022 inflation shock, RKLB cratered 83% (worse than the S&P’s 25% decline) but fully recovered by late 2024. During COVID, it barely dipped. The takeaway? It’s volatile but resilient enough to bounce back—if you can stomach the ride.

So, buy or wait?

Wait. The company’s execution is strong, the growth trajectory is compelling, and the balance sheet is healthy. But at 50-80 times sales for an unprofitable company, you’re paying for perfection.

Investors are essentially betting that Neutron succeeds, profitability eventually arrives, and the SpaceX IPO creates a valuation halo effect. Those are reasonable bets, but they’re priced in—and then some.

What’s the smarter move?

Let the stock digest this run. Given its volatility profile (remember that 83% drawdown?), a pullback is possible, and that can be used as an entry point. The long-term space opportunity is real, but there’s no need to chase a stock that’s already up 67% in 30 days. Also, investing in a single stock without comprehensive analysis can be risky. Consider the Trefis Reinforced Value (RV) Portfolio, which has outperformed its all-cap stocks benchmark (combination of the S&P 500, S&P mid-cap, and Russell 2000 benchmark indices) to produce strong returns for investors. Why is that? The quarterly rebalanced mix of large-, mid-, and small-cap RV Portfolio stocks provided a responsive way to make the most of upbeat market conditions while limiting losses when markets head south, as detailed in RV Portfolio performance metrics.

Invest with Trefis Market-Beating Portfolios

See all Trefis Price Estimates