Rocket Lab Owns 2/3 of the U.S. Launch Market -- That Isn't SpaceX

When Rocket Lab (NASDAQ: RKLB) reported second-quarter earnings last week, it ignited a multiday rally that sent its stock price soaring as much as 18%. And no wonder.

Sales at the small space rocket manufacturer soared 71% year over year, beating analyst forecasts. The per-share loss for the quarter was $0.08 -- not great -- but still better than the $0.10 loss that Wall Street forecast.

A historic quarter

In fact, Chief Executive Officer Peter Beck said Q2 was Rocket Lab's "highest revenue quarter in company history" -- no great surprise given that each succeeding quarter shows revenue growth. But Beck also said that Rocket Lab is seeing "strong and growing demand for our launch services and space systems products," such as the Electron rocket, Photon kick stage spacecraft, and satellites built for the U.S. Space Force. The company is also making progress on new products to power profit in the future.

First and foremost among these are the new Neutron rocket, a medium-lift rocket that, in a unique twist on traditional design, encapsulates its second stage within a reusable first stage with an integrated (and also reusable) payload fairing.

In last week's press release, Rocket Lab highlighted the recent successful first hot fire test of the Archimedes engine, nine of which will be used to power Neutron's first stage. Four days later, Rocket Lab posted a "how it started, how it's going" photo comparison on X first showing CEO Beck standing next to a mockup of the then-just-announced Neutron concept vehicle, side by side with a completed half-fairing for a real-life Neutron rocket.

What's more, just one day earlier, Rocket Lab announced its 10th mission so far this year, the launch of a Capella Space satellite to orbit atop an Electron rocket. Crucially, this was the first launch for Capella since September 2023, when an anomaly in an Electron rocket's second stage resulted in a loss of the payload. The fact that Capella maintained its faith in Rocket Lab -- and that faith was vindicated with a successful launch over the weekend -- has to come as happy news for Rocket Lab shareholders.

SpaceX, Rocket Lab, and ULA -- in that order

So yes, it's been a busy few days for Rocket Lab, and jam-packed with good news. Now here's some less good news.

According to Beck, Rocket Lab's Electron has become "the most frequently launched small rocket globally." And so far this year, Rocket Lab is responsible for "64% of all non-SpaceX orbital U.S. launches in 2024 to date." That sounds impressive, but it comes with a big caveat. SpaceX orbital U.S. launches already number 79 (and probably more by the time this article publishes). Meanwhile, Rocket Lab's 64% amounts to only 10 launches total.

That actually gives you a better idea of the distance between No. 2 rocket launcher Rocket Lab and No. 3 United Launch Alliance (ULA has launched four times this year, making up about 28% of non-SpaceX orbital U.S. launches), than of how close Rocket Lab is to overtaking SpaceX.

Hint: It's not even close. For the foreseeable future, the great American space race is going to remain with SpaceX as No. 1, then a big gap with everybody else.

The race for No. 2

Investors also need to be aware that Rocket Lab faces some serious competition even in the race to remain No. 2 to SpaceX.

Don't get me wrong. Rocket Lab is accelerating its launch cadence. Its revenue is accelerating. And there's a very real chance Rocket Lab will turn profitable in the next year or two. Still, now that United Launch Alliance has its new Vulcan rocket operational, it's moving quickly to regain its traditional role as one of America's leading launch companies. As I pointed out earlier this month, ULA currently has 23 Vulcan rockets in various stages of construction, and ULA CEO Tory Bruno is promising investors he will launch 20 times next year, and 25 times in 2026.

With 10 launches under its belt already in 2024, and more on the way, Rocket Lab could still out-launch ULA, and remain America's No. 2 launch provider in the future. But ULA is definitely going to try and give Rocket Lab a run for its money.

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Rich Smith has positions in Rocket Lab USA. The Motley Fool recommends Lockheed Martin and Rocket Lab USA. The Motley Fool has a disclosure policy.