Space stocks have had plenty of reasons to soar this fall. Non-public Elon Musk venture SpaceX completed a significant flight test of its Starship in October, while NASA's Europa Clipper departed for Jupiter's moon. Meanwhile, AST SpaceMobile Inc. (NASDAQ: ASTS) has skyrocketed by nearly 800% in the last year as it has launched satellites key to the delivery of its space-based cellular broadband service.

While it has not reached quite the same heights as AST, Rocket Lab USA Inc. (NASDAQ: RKLB) has nonetheless outperformed most other equities with a 173% share price increase in the last 12 months. The California-based firm provides space systems solutions and launch services for defense clients and, increasingly, space industry partners. Rocket Lab's rockets include Electron, an orbital-class small rocket, and Neutron, a large launch vehicle that is in development.

Partnerships With NASA

In the race among space companies to achieve and maintain stability, one approach is to collaborate with NASA, the largest space agency in the world. Indeed, Rocket Lab has prioritized creating cost-effective solutions for larger NASA projects, including the lunar CAPSTONE mission, which launched a Rocket Lab Electron rocket in 2022, and the upcoming ESCAPADE mission to Mars.

Rocket Lab has managed to undercut the prices quoted by competing businesses in an effort to secure NASA contracts. Now, the space agency is considering proposals from a dozen studies related to its Mars Sample Return project, which aims to bring back samples from Mars in the coming decade and a half. Rocket Lab's $2-billion solution is significantly under budget forecasts and expects a return date as early as 2031, many years faster than anticipated.

Growing Revenue, But Profitability Remains Elusive

Rocket Lab has a benefit over some other space firms because of its diversified revenue streams and the massive uptick in demand for its small satellites, as it anticipates launching more than 10,000 in the coming five years. This growth has helped to fuel an increase in revenue, as the company reported all-time high quarterly operating revenue of $106.3 million in the latest earnings report.

Like many growing companies, Rocket Lab's profitability remains elusive, however. The company has yet to post a quarterly profit. Last year, it generated $327 million in revenue but $177 million in net losses. While this is not surprising, Rocket Lab's significant cash burn does put pressure on the firm to complete the development of Neutron, which is currently targeted for 2025.

Rocket Lab does have a strong cash position of about $500 million, but again, due to massive costs for operations in the space industry, this stockpile can only sustain the company for so long.

All-Time High Stock Price

Another factor that may cause investors to pause is Rocket Lab's share price. At $11.20, the company is currently trading at an all-time high price level. Analysts are understandably uncertain about whether the stock can continue this upward trajectory.

As a result, the company has a consensus Hold rating, though four out of nine analysts still label the stock a Buy. Perhaps more important for investors is the consensus price target of $6.89, which is nearly 40% lower than current levels.

Analysts seem to believe that hype surrounding the space industry and Rocket Lab in particular have artificially ballooned the price and that, over time, it will settle to a more sustainable middle level.

What to Watch Going Forward

Investors considering Rocket Lab should keep an eye on announcements surrounding the Neutron project. A successful and timely launch of Neutron should open the company's already-bustling launch business even further and could be key to achieving profitability.

Another important factor in Rocket Lab's success is the outcome of the November election. The current administration announced in October that it would ease restrictions on exports of space-related items to ally nations, a move that is likely to benefit Rocket Lab and peers in the industry considerably. However, with a new administration set to assume control in January, it's unclear whether and how this policy may change in the coming months. Both of these factors could be important in determining whether Rocket Lab's momentum can continue.