Rocket Lab USA Inc. (NASDAQ:RKLB) shareholders recently saw RKLB stock hit a new 52-week high of $8.98 per share. As of this writing, it's pulled back a little to $8.69 per share but is still one of the best-performing stocks in 2024 and over the last 12 months. Many analysts believe that RKLB stock is a long-term buy, but is this a stock for investors to chase at this price?  

Rocket Lab is one of the top names in the red-hot space economy. Many companies like Space-X and Rocket Lab aim to be an end-to-end space company that can help customers build the infrastructure needed to make space travel a common reality. Rocket Lab generates revenue from its launch business and its space services business, which account for about 70% of the company's current revenue.  

The bullish case can begin with the idea that Rocket Lab is still standing. That can't be said for other companies in this space. However, it's also important to note that the company isn't turning a profit...yet. That makes it difficult to give the stock an accurate valuation.  

Launch Activity Has the Stock Ready for Liftoff 

The current reason for Rocket Lab's stock's performance comes from its product launches. On September 20, Rocket Lab successfully launched its 53rd Electron rocket. Electron is the company's flagship product, designed for small satellite launches, for which there is massive demand. Rocket Lab estimates that by 2030, there will be demand for over 10,000 satellites to be launched.  

The Electron is only the beginning. The company is also developing its Neutron rocket, which is designed to handle medium payloads. This will open a new revenue stream for the company.  

That will be a key factor in addressing the one issue that could be holding Rocket Lab stock from going "to the moon." That issue is the lack of profitability and negative free cash flow. This isn't unusual for a company like Rocket Lab, which is still in the growth stage. The company's proven track record will ensure that it will be able to borrow capital regardless of what's happening with interest rates.  

Don't Discount the Short Interest Factor 

RKLB stock has been one of the best-performing stocks over the last 12 months, climbing 103.3%. The stock is also up 55.8% in 2024, and investors who bought the dip in March have received an even larger gain.

Gains like that in an emerging growth stock like Rocket Lab brought out the short sellers. Short interest in RKLB stock is 18.7% of the float and has climbed 2.12% in the last 30 days. That means investors shouldn't discount the idea that some of this recent rally may be due to short covering.  

To support that thinking, on September 23, 2024, Cantor Fitzgerald reiterated its Overweight rating on RKLB stock and maintained its $7 price target. That's above the consensus price target of $6.86, but it's nearly 20% lower than the stock's current price.  

Moving Forward With RKLB Stock 

Rocket Lab is one of the leading names among aerospace stocks, and there is a reason to believe it's a long-term buy. However, it looks more than fairly valued at $8.82 per share, which is its price at the time of this writing. That said, if you were an investor in RKLB stock when it first went public, you may still be sitting on a loss. However, if you bought the stock after March 2022, you're likely sitting on a profit.

If you're approaching RKLB as a long-term investment, you could take some profit, but there's nothing to suggest you should abandon your current approach. Holding RKLB stock and waiting for the next dip is a sound strategy.  

But what if you're looking to trade the stock? The Rocket Lab Options Chain on MarketBeat shows the heaviest call activity around $10 and the heaviest Put activity around $9.50 over the next 30 days. That means this rally could still have a 10% to 15% upside.

Thirty days also nearly track with the company's next earnings report on November 7. At that time, investors may better understand Rocket Lab's path to profitability.  

The article "Rocket Lab Stock Soars: Should Investors Chase the Rally?" first appeared on MarketBeat.