The high-profile feud between President Donald Trump and billionaire entrepreneur Elon Musk has captured the attention of the public, political observers, and investors. At first glance, the clash may seem rooted in politics and personality, but beneath the surface lies the potential for a transformative impact on the multibillion-dollar space industry. As the dispute intensified, the U.S. government reportedly began to reconsider its heavy reliance on Musk’s SpaceX for sensitive military, defense, and NASA-related missions.

Analysts suggest that this spat could unintentionally benefit other space-focused companies, particularly those positioned to step in and offer competitive alternatives to SpaceX. Among these rising contenders, Rocket Lab (RKLB) has been singled out as a company poised to benefit significantly. With its proven Electron rocket, ongoing development of the more powerful and cost-effective Neutron rocket, and recent strategic acquisitions that bolster its defense market capabilities, the company is well-positioned to capitalize on a potential shift in government contracting.

In this article, we will explore how Rocket Lab could become the surprise winner of the Trump-Musk fallout. 

About Rocket Lab Stock

Rocket Lab (RKLB) is a fully integrated end-to-end space company. It offers reliable launch services, spacecraft components, satellites, and on-orbit management solutions designed to make space access faster, easier, and more cost-effective. The company is best known for its Electron launch vehicle, a small orbital rocket engineered to carry payloads of up to 300 kg into low Earth orbit. RKLB is also working on the Neutron launch vehicle, a medium-lift rocket designed for deploying large constellations, conducting interplanetary missions, and potentially supporting human spaceflight. Its market cap currently stands at $12.4 billion.

Shares of the space infrastructure company have climbed 7.3% on a year-to-date basis.

Trump-Musk Feud May Create New Opportunities for RKLB

Tensions between Trump and Musk have fueled speculation that some lucrative government space contracts may become available to competitors. The dispute began last week after Musk criticized Trump’s proposed tax legislation on X. That quickly escalated into personal attacks. Trump fired back by threatening repercussions, including the potential cancellation of federal contracts awarded to Musk-led companies like SpaceX.

Musk responded by suggesting he might decommission SpaceX’s Dragon spacecraft — currently the only U.S. vehicle transporting astronauts to the International Space Station — before later walking back the comment. Over the weekend, Musk posted that “we have got the spaceships, and they do not,” implying the U.S. depends on SpaceX for space transport.

Meanwhile, Musk’s deep-rooted ties with NASA — and, by extension, the U.S. government — span numerous contracts, the most lucrative being NASA’s use of SpaceX’s Falcon 9 rocket to transport astronauts to the International Space Station. Notably, the Pentagon also depends heavily on SpaceX for launching its most sensitive satellites. With no competitors currently matching SpaceX’s orbital reach or payload capacity, NASA remains reliant on Musk until viable alternatives are developed. However, when it comes to launching U.S. defense and intelligence payloads into low Earth orbit (LEO), the government does have alternative options.

For instance, Rocket Lab’s Electron rocket, having completed 66 launches, is a proven and reliable option for both government and commercial clients. The Electron, built to deploy small satellites into LEO, was recently awarded a $5.6 billion National Security Space Launch contract to deliver payloads into orbit. However, while the Electron doesn’t quite measure up to the Falcon 9, the company’s next-generation Neutron rocket is targeting the same launch contracts, offering a more cost-effective alternative.

While the Neutron can carry a payload of 14 tons compared to the Falcon 9’s 22 tons, its launch cost of approximately $50 million, versus $70 million for the Falcon 9, makes it an appealing option for modest-sized payloads. Moreover, the Neutron is expected to eventually support deep space missions and human spaceflight, putting it in direct competition with SpaceX for high-profile NASA and ISS launch contracts. Notably, the rocket has already been chosen to compete for up to $5.6 billion in potential launch service contracts from the U.S. Air Force. The Neutron rocket is anticipated to enter service soon, with its first launch planned for the second half of 2025.

Although tensions between Trump and Musk now seem to be cooling, the dispute raised concerns among officials at NASA and the Pentagon. Over the weekend, The Washington Post reported that NASA and Pentagon officials acted “swiftly” last week to urge SpaceX competitors to accelerate the development of alternative rockets and spacecraft. Government officials have reached out to at least three commercial space companies — Rocket Lab, Stoke Space, and Jeff Bezos’s Blue Origin — to inquire about the status of their rockets and when they could be ready for government missions, according to the report.

Indeed, the government may begin to lessen its reliance on SpaceX by turning to existing alternatives or soon-to-be-developed options, potentially benefiting companies like Rocket Lab.

Geost Deal Signals RKLB’s Expanding Role in National Security

On May 27, Rocket Lab announced the acquisition of Geost, a strategic step that advances the company’s evolution into a comprehensive space and defense contractor. The deal is valued at up to $325 million, comprising $125 million in cash, $150 million in privately placed Rocket Lab common stock, and a $50 million earn-out contingent on meeting revenue targets. The acquisition is expected to close in the second half of 2025.

The key takeaway is that the acquisition strengthens Rocket Lab’s position in the defense market. Geost specializes in developing and manufacturing electro-optical and infrared payloads, a segment of the defense market experiencing rapid growth due to its role in space-based sensing. With that, the move solidified the company’s position as a disruptive force in the national security space sector.

Meanwhile, the acquisition of Geost marks Rocket Lab’s second deal aimed at strengthening its capabilities for a larger role in the space defense market. Earlier this year, the company acquired Mynaric.

How Did Rocket Lab Perform in Q1?

On May 8, Rocket Lab released its financial results for the first quarter of 2025. The company’s total revenue grew 32.1% year-over-year to $122.57 million, exceeding Wall Street’s consensus of $121.4 million and landing at the high end of its guidance. Notably, Rocket Lab’s business is divided into two main segments: space systems and launches. The former generates the majority of revenue, while the latter drives the company’s future growth potential. With that, space systems revenue stood at $87 million in Q1, up 45% year-over-year, driven mainly by growth in spacecraft manufacturing. Launch Services revenue increased 9% year-over-year to $35.6 million, mainly due to a higher launch frequency, with five Electron missions completed.

In terms of profitability, GAAP gross margin for the quarter came in at 28.8%, surpassing the company’s previous guidance range of 25% to 27%. Notably, gross margin improved sequentially due to a more favorable mix in satellite manufacturing, partially offset by a decline in the launch segment margin, mainly driven by a lower average selling price. RKLB posted a GAAP loss per share of $0.12, in line with expectations.

Meanwhile, the company ended the quarter with a total backlog of $1.067 billion, including $422.2 million in launch services and $644.8 million in space systems. Although overall backlog growth has been modest, launch backlog nearly doubled year-over-year, supported by strong underlying trends as the company capitalizes on a robust pipeline of Neutron, Electron, and HASTE opportunities. It’s also worth noting that the backlog is now more heavily weighted toward government, which accounts for 54% of the total, compared to 46% from commercial. This is a positive development, as government contracts tend to be longer in duration and are less susceptible to budget shortfalls.

Rocket Lab also has a healthy balance sheet, holding $517 million in cash and short-term deposits as of Q1, bolstered by a $92.8 million ATM equity offering.

Still, RKLB stock slumped over 11% after earnings as the company’s guidance for the current quarter disappointed investors. Management projected Q2 revenue between $130 million and $140 million, with the midpoint falling short of consensus, and guided for a loss of $28 million to $30 million — wider than expected.

RKLB Valuation and Analysts’ Estimates

According to Wall Street estimates, the company’s GAAP net loss is expected to narrow by 13.2% year-over-year to $0.33 per share in 2025. Its revenue is projected to grow 30.60% from the previous year to $569.69 million.

In terms of valuation, RKLB stock is trading at a forward EV/Sales multiple of 21.97x, well above the sector median of 1.98x. However, the premium could be justified. The Neutron rocket, being both cost-effective and reusable, is a game-changer for the company, positioning it to compete with SpaceX’s Falcon 9, and much of this optimism is already priced into the valuation.

What Do Analysts Expect for RKLB Stock?

Overall, Wall Street analysts are optimistic about Rocket Lab’s future, assigning the stock a “Moderate Buy” consensus rating. Among the 14 analysts offering recommendations for the stock, eight rate it as a “Strong Buy,” one gives a “Moderate Buy” rating, and the remaining five advise holding. Notably, the stock trades close to its mean price target but still has nearly 30% upside potential to the Street-high target of $35.

On the date of publication, Oleksandr Pylypenko did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.