We came across a bullish thesis on Rocket Lab USA, Inc. (RKLB) on wallstreetbets Subreddit Page by optionseller. In this article, we will summarize the bulls’ thesis on RKLB. Rocket Lab USA, Inc. (RKLB)'s share was trading at $27.62 as of Feb 12^th.

Rocket Lab (RKLB) has had a remarkable year, surging 690% in 2024, from a low of $3.47 in April to a market cap of $12.3 billion by January 2025. Despite its meteoric rise, the company is poised for even more growth. Its small, reusable Electron rocket has already carved out a niche in the space launch market, establishing itself as one of the only three companies capable of reusable rockets, alongside SpaceX and Blue Origin. With a perfect 100% success rate in 2024, including missions launched just 24 hours apart from two private spaceports, Rocket Lab has proven its reliability and flexibility in the industry. The Electron’s launch cost of $8.5 million, compared to Falcon 9’s $70 million, offers a much more accessible solution for small satellite launches, making it akin to UberX in space, where customers can book a launch whenever they need it.

However, Rocket Lab’s true potential lies in its Neutron rocket, which is poised to challenge SpaceX's Falcon 9. Although initially dismissed for its similar design, the Neutron’s radical reengineering has set it apart. Its innovative second-stage design, which reduces aerodynamic forces by protecting the second stage inside the first, makes it more fuel-efficient and reusable. The Neutron's first launch in 2025 is expected to be a major catalyst, marking an "iPhone moment" for the space industry. The Neutron, designed from first principles and using cutting-edge carbon fiber technology, is poised to disrupt the industry and could offer a reusability advantage that Falcon 9 struggles to match.

Despite a delayed launch, Rocket Lab's commitment to engineering excellence is unquestionable, with a development cost of $300 million for Neutron compared to $2.5 billion for SpaceX's rockets. The company’s track record of success, including nearly launching Electron into orbit on its first try, positions it well for future triumphs. Peter Beck, Rocket Lab’s founder, has remained driven by a deep passion for space, overcoming personal and professional challenges to build a world-class company. With favorable political tailwinds and a space industry now dominated by a select few, Rocket Lab stands to benefit.

Rocket Lab is undervalued compared to its competitor SpaceX, which is valued at $350 billion in the private market. With its Neutron rocket, Rocket Lab could be worth $35 billion, or $78 per share. However, this is just the beginning. As the company continues its engineering innovations, its stock price could climb even higher, making it an exciting long-term investment opportunity.

Rocket Lab USA, Inc. (RKLB) is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 16 hedge fund portfolios held RKLB at the end of the third quarter which was 15 in the previous quarter. While we acknowledge the risk and potential of RKLB as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than RKLB but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

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Disclosure: None. This article was originally published at Insider Monkey.