Should You Buy Rocket Lab Stock Below $70?
2026-07-20 19:05
•Brett Schafer •The Motley Fool
•• •• Axe Capital view
Why Rocket Lab Is Too Hot to Handle Below $70
Despite bold moves, Rocket Lab's sky-high valuation makes it a tough buy for now.
Rocket Lab has taken a heavy hit, down 55% from its peak, now trading around $67.50. The company's aggressive chase of SpaceX with its Neutron rocket and an $8 billion Iridium acquisition shows ambition, but ambition alone doesn't justify a price-to-sales ratio of 55 — that’s ludicrous by any standard. For South African investors, this is a classic example where excitement about innovation must be balanced by valuation discipline. Our currency, the rand, often reacts sharply to swings in USD risk assets. A major tech stock selloff like this tends to ease pressure on the rand initially, but a rebound in firms like Rocket Lab is unlikely anytime soon without tangible earnings growth. Better to watch from the sidelines. If you're itching for exposure to tech on the JSE, Naspers and Prosus offer actual profits, even if they’re not rocket ships. The trade-off on Rocket Lab: pay up now and you might get burned, wait for a meaningful discount and clearer profitability signals. this is just my opinion and not financial advice
Avoid Rocket Lab for now and wait for the valuation to normalize or earnings visibility to improve. Meanwhile, consider selective exposure to Naspers and Prosus for global tech exposure with South African currency leverage.
- RKLB
- USD/ZAR
- Naspers
- Prosus
- A sudden breakthrough in Rocket Lab’s commercial launches could justify the premium
- USD strength could pressure USD/ZAR and limit returns from offshore tech exposure
6/10
Rocket Lab stock has fallen 55% from its May highs and currently trades at $67.50. While the company is making aggressive moves to compete with SpaceX, including a proposed $8 billion acquisition of Iridium and development of its Neutron rocket, the stock remains overvalued at a P/S ratio of 55. The analyst recommends waiting for further price declines before investing.
This article was originally published by The Motley Fool and has been adapted here for Axe Capital Trading News.
Publisher: The Motley Fool
Author: Brett Schafer
Categories: Equities, M&A
Tickers: RKLB, IRDM
Sentiment: Negative - Despite strong business fundamentals and aggressive growth initiatives, the stock is considered overvalued at a P/S ratio of 55. The analyst explicitly recommends against buying at current levels and suggests waiting for further price declines. Subject of Rocket Lab's proposed $8 billion acquisition. Mentioned as a strategic asset for spectrum rights and satellite communications capabilities, but no independent investment sentiment is expressed.
Keywords: space economy, vertical integration, Neutron rocket, Iridium acquisition, valuation, price-to-sales ratio, SpaceX competition
Insights:
- RKLB: Negative: Despite strong business fundamentals and aggressive growth initiatives, the stock is considered overvalued at a P/S ratio of 55. The analyst explicitly recommends against buying at current levels and suggests waiting for further price declines.
- IRDM: Neutral: Subject of Rocket Lab's proposed $8 billion acquisition. Mentioned as a strategic asset for spectrum rights and satellite communications capabilities, but no independent investment sentiment is expressed.