Rocket Lab‘s (NASDAQ: RKLB) stock price declined 23% from Oct. 12 to Oct. 16, marking its worst single-week decline since its public debut five years ago. Let’s see what caused Rocket Lab’s stock to fizzle out — and if that pullback represents a buying opportunity.
A double whammy of bad news
Rocket Lab produces reusable orbital rockets for NASA and other organizations. It’s successfully launched its Electron rockets 97 times to deploy over 268 satellites. The Electron carries much smaller payloads than SpaceX‘s (NASDAQ: SPCX) Falcon rockets.
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Rocket Lab originally planned to launch its larger Neutron rocket, which was designed to directly compete against SpaceX’s Falcon 9, by the end of 2026. But on Oct. 14, it postponed the Neutron’s first launch to 2027, due to a defect in its carbon-composite tank.
That wasn’t the first time Rocket Lab delayed the Neutron. Back when it unveiled the Neutron in 2021, it planned to launch its first rocket by 2024. But it eventually pushed that target back to 2025 and 2026 — so its latest delay to 2027 raises some bright red flags.
That same week, Ligado Networks sent a letter to the Federal Communications Commission (FCC) to challenge Rocket Lab’s planned takeover of Iridium (NASDAQ: IRDM). Ligado argues that Iridium, which tried to block its partnership with AST SpaceMobile (NASDAQ: ASTS), regularly uses petitions to delay competing satellite services. If the FCC scrutinizes that $8 billion deal, it could stunt Rocket Lab’s expansion into an end-to-end space services company.
Did investors overreact to those setbacks?
Those setbacks were disappointing, but Rocket Lab only generated 19% of its revenue from its Launch Services segment, which handles its Electron and Neutron rockets, in its latest quarter.
The remaining 81% came from its Space Systems segment, which produces satellite components, solar panels, and complete spacecraft buses. Its acquisition of Iridium, which it expects to close in 2027, will expand that segment with a global satellite network.
Rocket Lab is still generating plenty of revenue from its Electron launches, and it’s already locked in major government and commercial customers for the Neutron. It’s also securing more satellite construction contracts from the U.S. Space Development Agency and other clients.
