Baillie Gifford's $1.25 Billion Bet on Rocket Lab Is a Vote of Confidence, but Can the Stock Justify a $38 Billion Valuation While Still Losing Money?

Shares rose +2.55% to $71.06 after filings revealed that Baillie Gifford, one of the world's most prominent growth-focused investment firms, massively expanded its wager on Rocket Lab. The move comes as the rocket maker stacks up defense contracts at a pace that even its bulls didn't expect — but the stock still trades at a nosebleed premium with no profits in sight.

A Top-Tier Investor Just Doubled Down — Twice in Six Months. Baillie Gifford bought 5.73 million additional shares in Q4, lifting its total to 17.85 million shares. That follows a 176% stake increase in Q3, when the firm accumulated 12.1 million shares worth $581 million.

RKLB now represents roughly 1% of Baillie Gifford's portfolio — its 22nd-largest position — valued at $1.245 billion. When a firm that backed Tesla, Amazon, and SpaceX early goes this deep this fast, it signals institutional conviction that Rocket Lab's backlog will convert to real revenue growth.

A Contract Avalanche Is Building the Revenue Bridge. Rocket Lab's total backlog now exceeds $2 billion , underpinned by two massive wins: an $816 million Space Force satellite deal and a $190 million Department of Defense contract for 20 hypersonic test flights.

The company sold 28 launches in Q1 2026 alone — nearly matching its entire 2025 total.

Management targets roughly $880 million in 2026 revenue, up from $602 million in 2025.

The Price-Per-Launch Math Is Quietly Improving. Electron launch prices have climbed from $6.5 million in 2018 to $8.4 million in 2024, and the new HASTE missions price at roughly $9.5 million each — a 13% premium over the prior known Electron price.

The launch division's gross margin has surpassed 40% , meaning each new contract contributes more profit per dollar than before.

Valuation Remains the Elephant in the Room. At roughly 70 times trailing sales and still unprofitable, Rocket Lab is not expected to earn its first profit for another couple of years.

The company also just finished raising up to $1.1 billion in fresh capital, diluting shareholders with 6.7 million new shares. Baillie Gifford's conviction is a powerful signal — but investors should remember that conviction and valuation discipline are two very different things.