Rocket Lab continues to prove it can execute on the launch pad, but Wall Street seems more focused on what is happening behind the scenes. The company’s latest Electron mission, whimsically dubbed “The Cosmos Will See You Now,” went off without a hitch last week, successfully delivering two satellites into orbit for the European space tech firm Open Cosmos. The mission underscored the reliability of Rocket Lab’s core small-launch business, yet the stock (RKLB) has faced significant downward pressure, dropping roughly 5% recently and trading well below its recent highs.
Despite the operational win, investors are reacting to a mix of internal development snags, massive insider selling, and shifting capital within the broader space sector.
Neutron Development Snag
The primary internal concern centers on Neutron, the company’s upcoming medium-lift rocket. Focus shifted sharply from the successful Electron launch to a testing anomaly that occurred on January 21 in Long Beach, California. During a hydrostatic pressure qualification test, a Stage 1 tank ruptured.
Rocket Lab management was quick to clarify that the tank was pushed beyond expected flight loads, describing the failure as a standard part of validating structural margins. The company reported no significant damage to the surrounding facility and noted that a replacement tank is already in production. While engineers are currently analyzing the data to assess any schedule impact, the market remains jittery. Any hiccup in the Neutron program—critical to Rocket Lab’s future growth—tends to spook investors who are wary of the delays that plague the aerospace industry.
The SpaceX Shadow and Sector Rotation
Beyond Rocket Lab’s own walls, rumors of a massive liquidity event at SpaceX are draining capital from the rest of the sector. Speculation is mounting that Elon Musk’s industry juggernaut could be prepping for an IPO or a secondary sale that values the company at over $1.5 trillion.
Market analysts suggest a “sector rotation” is underway, where institutional investors are selling off positions in smaller launch and satellite providers to free up cash for a potential stake in SpaceX. This liquidity drain has triggered double-digit percentage drops across various space stocks in recent weeks, with Rocket Lab getting caught in the undertow.
Insider Selling and Political Headwinds
Adding to the bearish sentiment are significant divestments by company leadership. CFO Adam Spice recently sold approximately $103 million worth of stock, reducing his direct stake by nearly half. In total, insiders have offloaded roughly $272 million in shares over the past three months. While executive sales can happen for many reasons, the sheer volume has raised eyebrows regarding the stock’s short-term valuation.
Simultaneously, political maneuvers in Washington are forcing a recalibration of long-term revenue expectations. Congress has moved to withhold funding for a planned 2031 Mars mission, leaving a potential contract opportunity valued at around $4 billion in limbo. This uncertainty complicates the long-term growth narrative for investors banking on deep-space government contracts.
Technical Outlook and Earnings Watch
The stock’s technicals reflect this mixed momentum. RKLB is currently trading about 11% below its short-term 20-day simple moving average, though it remains above the longer-term 50-day and 100-day trend lines. Momentum indicators like the MACD are signaling bearish pressure, and the RSI is sitting in neutral territory, suggesting the stock is struggling to find a direction.
Despite the pullback, the trailing 12-month performance remains strong, with shares up over 170%. Wall Street analysts largely maintain a constructive view, with firms like Bank of America recently raising price targets, though the average consensus target of around $73 suggests limited immediate upside from current levels.
All eyes are now fixed on February 26, when Rocket Lab releases its fourth-quarter earnings. Management is expected to report revenue of roughly $178 million—a 34% year-over-year jump—and a loss of nine cents per share. More importantly, investors will demand a concrete update on the Neutron timeline to determine if the recent testing failure was merely a speed bump or a sign of deeper delays.