Space is hard. Making money in space may be even harder.
For investors eyeing the rapidly evolving aerospace sector, the choice between Rocket Lab (NASDAQ: RKLB) and the upcoming initial public offering (IPO) of SpaceX presents a complex puzzle. While market capitalization might suggest that the smaller Rocket Lab has more “room to run,” a deeper dive into the financials reveals that size and growth dynamics are more nuanced than they appear.
With SpaceX expected to debut with a market valuation as high as $2 trillion—dwarfing Rocket Lab’s valuation of under $86 billion—the temptation is to assume the smaller firm has more potential for explosive growth. However, recent regulatory filings and market data indicate that both companies face significant challenges in converting their impressive revenue growth into bottom-line profits.
Two expensive space stocks — but one costs more than the other
When comparing valuations, the price-to-sales metrics tell a surprising story. While Rocket Lab is growing its revenue slightly faster than SpaceX, it also commands a steeper valuation relative to its sales. SpaceX, despite its massive scale, is trading at approximately 107 times its 2025 sales, whereas Rocket Lab carries a significantly higher multiple of 142 times sales.
This data challenges the assumption that larger companies necessarily experience stagnant growth. SpaceX has demonstrated an ability to maintain rapid expansion despite its already substantial revenue base, effectively defying the traditional “law of large numbers” that often slows down mature corporations.
Gross profits and the R&D they pay for
A primary factor behind the current lack of GAAP profitability for both companies is their massive commitment to research and development (R&D). Both firms are aggressively reinvesting their gross profits into future infrastructure:
- Rocket Lab: Currently focused on the development of its Neutron rocket, the company is investing more than 100% of its gross profit back into R&D.
- SpaceX: Focused on its Starship megarocket, SpaceX achieved a gross margin exceeding 50% last year. In 2025, the company reinvested nearly all of that profit, totaling $9.5 billion in R&D—a 55% increase over its 2023 spending.
While Rocket Lab maintains a respectable 34% gross margin, the scale of investment available to SpaceX is vastly superior. By funneling billions into innovation, SpaceX is securing a dominant position in the market. Ultimately, while Rocket Lab may look like the “growth” play based on market cap, the sheer scale of R&D funding suggests that SpaceX is positioning itself to lead the industry for the long term.
