Key Points
Rocket Lab stock has surged more than 650% over the past five years, turning a $5,000 investment into nearly $38,000.
The company just reported a record $2.36 billion backlog, signaling strong demand in the rapidly expanding space industry.
Five years ago, Rocket Lab (NASDAQ: RKLB) was a small rocket company that plenty of investors had never heard of. Since then, it has gone on an absolute tear.
Could anyone have seen a run like this coming back then? Its believers sure did.
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A 650% return in five years
Five years ago, Rocket Lab shares traded just above $10.60. Today it trades around $80. A $5,000 investment in 2021 would now be worth around $37,810 today -- a more than 650% gain.
Take a look at the incredible run in the chart below.
The bottom line
So where does it go from here? The growth story here is real. The space industry is expanding rapidly, and the company just reported a record backlog of $2.36 billion.
Image source: Getty Images.
But if you ask me, investors have gotten ahead of themselves. The stock trades at more than 60 times its annual sales and it is burning cash fast. Its free cash flow last year was more than $270 million. And operationally, it continues to delay its Neutron rocket. This is absolutely critical to the company's long-term success, and if Neutron is delayed further, the stock could fall hard.
Still, I won't deny there's a lot to like. I just think the valuation is off.
Johnny Rice has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Rocket Lab. The Motley Fool has a disclosure policy.