Rocket Lab has made headlines once again, securing a monumental contract from the U.S. Space Force valued at $816 million to build 18 missile tracking satellites. This win, announced on December 19, marks the largest contract in the company’s history, surpassing the previous award of $515 million received just two years prior.
Both contracts are part of the Space Force’s ambitious Proliferated Warfighter Space Architecture (PWSA), designed to enhance missile detection capabilities. The 2023 contract, known as the Transport Layer Tranche 2 Beta (TLT2B), focused on data relay satellites, while the new Tracking Layer Tranche 3 (TRKT3) contract tasks Rocket Lab with constructing advanced missile tracking satellites. These satellites will be equipped with cutting-edge missile warning and tracking sensors, enabling persistent tracking of potential missile threats, including hypersonic systems.
Notably, Rocket Lab’s victory in securing a share of such a significant contract alongside industry giants like Lockheed Martin, Northrop Grumman, and L3Harris firmly establishes the company as a key player in the space sector. Each contractor received an equal order of 18 satellites as part of a total $3.5 billion contract.
In an exciting development for investors, all satellites in TRKT3 will feature Rocket Lab’s advanced StarLite space protection sensors. Previously, only a portion of previous tranches included these sensors, which protect satellites from directed energy threats. This innovation not only signifies Rocket Lab’s advancement but also opens potential revenue avenues from selling StarLite sensors to other contractors involved in the TRKT3 project.
Rocket Lab has projected potential earnings of about $1 billion from supplying various components for this project, bringing the total potential revenue from the TRKT3 contract to approximately $1.8 billion. This projected income significantly exceeds Rocket Lab’s total revenue from all businesses for the past year, promising a substantial impact on their financial outlook over the next four years.
While investors remain cautious due to Rocket Lab’s current unprofitability and high market valuation, the significant revenue boost from such contracts may indicate a turnaround. The company’s gross profit margin from launching rockets has now surpassed that of satellite manufacturing, hinting at a positive trajectory for future profitability.
The recent surge in Rocket Lab’s stock, which has risen by 17% following the announcement of the TRKT3 contract, is a reflection of the market’s optimism regarding the company’s future prospects. Although challenges remain, continued success in securing large contracts like this one could position Rocket Lab as a valuable buy in the near future.