$RKLB Rips +29% After Making Space Drugs A Reality... (Yes, You Read That Right)

Soooo Rocket Labs USA is definitely having a moment, and Wall Street is losing its collective mind. ICYMI, the stock initially started its frenzy (shooting up +12.4%) after KeyBanc decided to slap an “overweight” rating with a price target hike from $8 to $11. 

(Source: Market Watch) 

The reason? Well, because Rocket Lab just finished tests for its second launch with Varda Space Industries who just so happens to be manufacturing drugs in space. Yeah, you read that right. Apparently we’re now cooking up pharmaceuticals in zero gravity, because Earth-based labs are so last year (LOL). 

(Source: Giphy) 

Now if this sounds like a plot from a weird low-budget sci-fi movie where SpaceX teams up with Martin Shrekli to sell overpriced space meds (with a soundtrack that exclusively includes hits from the Wu-Tang Clan), you're not wrong. But hey, Rocket Labs stock is up 84.73% year-to-date, so who cares if this feels like the opening act of a cyberpunk nightmare? Money’s money, baby. And in the past five days alone, the stock jumped 29.25%. Insane. 

(Source: Simply Wall Street) 

This massive showing in stock performance pretty much has analysts confused, even though they’re pretending they aren’t. For instance, while Rocket Labs is exploding, Cantor Fitzgerald gave the stock an “overweight” rating, which sounds like a good thing until you realize their price target is $7.00. That’s a potential 30.35% drop from the company’s current price. So, thanks for nothing, Cantor. 

(Source: MarketBeat) 

Meanwhile, KeyBanc is out here with a price target of $11.00, shooting for the stars like they’re riding along on one of Rocket Lab’s payloads. They think Rocket Lab is going to dominate the space industry, which honestly feels like a lot of faith to put in a company that’s making money slower than a sloth on Ambien. (More on that in a moment).  

On the other hand, Morgan Stanley remains it’s downgrade on Rocket Labs from “overweight” to “equal weight” as they dropped their price target to $6.00. 

(Source: Investing.com) 

So clearly, even the analysts can’t make up their damn minds in the midst of this frenzy. But with that said, the negative outlooks from Cantor and Morgan Stangley are definitely understandable. Why? Because Rocket Labs is still not profitable. 

In fact, they posted a loss of 8 cents per share last quarter. But hey, that’s better than the 10-cent loss everyone was expecting, so let’s throw a party and pretend they’re crushing it? Revenue, though, was a girthy $106.25 million, up 71.2% from last year. So obviously even though they’re bleeding money, they are at least bleeding in the right direction… I guess?  

(Source: Giphy) 

Additionally, Rocket Lab has a debt-to-equity ratio of 0.90. Translation? They’re borrowing cash like my college fraternity friends maxing out their parents’ credit card for spring break. But investors still don’t seem to give a darn, because as long as Rocket Lab keeps launching stuff into space (and maybe bringing back some space drugs), it’s all gravy baby. 

(Source: The Street) 

So given all of this, is Rocket Lab worth your hard-earned cash? Well according to five analysts, it’s a “buy,” and four others are sitting on the fence with a “hold” rating. Plus, it’s also worth mentioning that the stock’s P/E ratio is a mind-boggling negative 27.08, which basically means we’re in “hope and dreams” territory.

However, what’s really interesting here, is that while retail traders are buying up this stock like it’s the greatest thing since sliced bread, company insiders are cashing out. For example, CFO Adam Spice, conveniently sold 62,512 shares at $6.96 a pop. That’s $435,083.52 in his pocket, while Rocket Lab Director, Micahel Griffin, also dumped 39,446 shares at $6.90. So while you’re out here debating whether to buy more shares, it’s important to know what’s really going on behind the scenes. 

(Source: Giphy) 

So in reality, while the stock is soaring, the company is still losing money while insiders are selling shares like tomorrow is doomsday. But if you’re feeling lucky—and don’t mind betting on space drugs— then it might be worth a shot. 

But hey, what do I know? I’m just giving you all the facts - but remember what goes up must come down… unless, of course, you’re popping pills from space, amirite? 

In the meantime, keep an eye on Rocket Lab throughout the week and as always stay safe and stay frosty, friends! Until next time… 

P.S. Whadda beauty! Our alert last week definitely proved itself worthy as $MNPR ripped to a peak of +66.05% in less than 72 hours! But, but but… that was last week. This week though? Oh baby, our screeners are flashing green on one little known stock... and by the looks of it, we might have another $LFLY on our hands (ICYMI, $LFLY rocketed 142% in less than 25 minutes). Meaning, if you haven't done so yet, I highly suggest upgrading to premium before things get crazy once we drop our newest trade alert! Don't say I didn't warn ya...

Stocks.News does not hold positions in companies mentioned in the article.