These 3 Space Stocks Soared in 2024: Can the Momentum Last?

Key Points

• The space industry emerged as one of the most exciting investment themes in 2024, with companies like Rocket Lab, Intuitive Machines, and Redwire Corporation delivering triple-digit gains.
• The space economy is projected to reach $1 trillion by 2040, but high valuations and speculative risks might lead to short-term volatility.
• Key players like Rocket Lab and Intuitive Machines face critical tests in 2025, including significant launches and contract fulfillments that could sustain their momentum.

In 2024, the space industry emerged as one of the most exciting investment themes, with small-cap aerospace and space technology companies outperforming broader markets. Stocks like Rocket Lab NASDAQ: RKLB, Intuitive Machines NASDAQ: LUNR, and Redwire Corporation NYSE: RDW have gained between 360% and 720% over the previous year, driven by impressive developments and growing investor enthusiasm. 

While the long-term growth potential of the space economy is immense, with Morgan Stanley projecting the industry to reach nearly $1 trillion by 2040, investors might be left wondering if the momentum can carry into 2025 or if these stocks are due for a breather.

Rocket Lab: A Launch Pad for Growth?

Rocket Lab has seen its stock climb by over 360% over the past year, fueled by its success in launching small satellites using its Electron rocket. The company also offers spacecraft design and manufacturing services, constellation management, and defense solutions, with nearly 70% of its revenue coming from its launch and space systems businesses. With over 10,000 satellites expected to require deployment by 2030, Rocket Lab is well-positioned to capitalize on the growing demand for small satellite launches.

The company’s next significant milestone is the anticipated 2025 debut of its medium-lift Neutron rocket. This innovation could unlock new revenue streams by enabling more significant payload launches and broadening its customer base. Additionally, Rocket Lab recently expanded its NASA partnership through the VADR program,  which now included Neutron, expanding capabilities for more substantial payload missions.

Despite these strengths, profitability remains elusive, and valuations are a concern. While analysts maintain a Moderate Buy rating on the stock, consensus price targets suggest potential downside, reflecting caution over Rocket Lab’s high valuation and expected capital expenditures related to the development of Neutron. Success with the Neutron rocket and efficient cost management will be critical in sustaining investor confidence.

Intuitive Machines: Lunar Ambitions

Intuitive Machines had a meteoric rise in 2024, with its stock surging over 720% over the previous year. The company focuses on enabling lunar exploration and infrastructure development, positioning itself as a leader in the race to establish a human presence on the Moon. In September 2024, Intuitive Machines secured a NASA contract worth up to $4.82 billion over the next decade, supporting the Artemis program by deploying lunar relay satellites and communication systems.

Looking ahead, the IM-2 mission, set to launch in 2025, will see Intuitive Machines deploy Nokia’s Lunar Surface Communication System to establish the first cellular network on the Moon. While the company’s recent performance is impressive, its high valuation and speculative nature make it a high-risk, high-reward investment. Investors may find better opportunities and entries on pullbacks to key technical support levels, such as its rising 20-day SMA near $16. Analysts are bullish on the stock, with a consensus Buy rating, although, like RKLB, the consensus price target forecasts the potential for double-digit declines. 

Redwire Corporation: Building Space Infrastructure

Redwire Corporation, a provider of space infrastructure solutions for government and commercial clients, saw its stock climb 436% over the previous year. Key highlights include its involvement in the European Space Agency’s Hera mission, Europe’s first planetary defense initiative, and most recently, its camera technology deployment on Firefly’s Blue Ghost lunar lander.

Redwire's established position as a critical supplier of space technologies positions it well for future growth, but like its peers, the stock’s valuation has become stretched following its 2024 rally. Analysts are bullish on the company with a Moderate Buy rating like the above two stocks. However, the consensus price target implies a rich valuation, with the target forecasting a potential 37% downside. So, like LUNR, investors looking to get involved might be better off waiting for a more substantial pullback near key rising moving averages to gain a better risk: reward entry.