Rocket Lab Stock Drops After Warning on Neutron Launch Delays

WELLINGTON, New Zealand — Rocket Lab USA Inc. experienced a significant decline in its stock on Tuesday, with shares dropping nearly 10% after Bleecker Street Research issued a stark warning regarding the upcoming launch of its Neutron medium-lift vehicle. The report suggests that the rocket may not launch until mid-2026 or even 2027, contrary to the company’s initial target of mid-2025.

As of 1:15 p.m. ET, Rocket Lab’s stock had fallen by 9%, contributing to a year-to-date decline of 20.38%. The drop was attributed to increased skepticism surrounding the company’s timeline for its Neutron rocket, which had previously fueled a remarkable 485% increase in market value over the last year.

Bleecker Street Research, which specializes in publishing short ideas for its parent stock-shorting firm, highlighted that investor excitement surrounding Neutron’s launch was misplaced. The firm’s analysis claims that Rocket Lab has “materially misled investors about the likelihood” of a mid-2025 launch. The analysts at NextSpaceflight.com had initially speculated a July launch date for Neutron, but Bleecker Street pointed to significant delays.

According to information from Bleecker, challenges in engine development, production of the vehicle’s structure, construction of necessary launch infrastructure, and transport arrangements have all caused substantial setbacks. Notably, the research firm cited conversations with 23 unnamed rocket experts, including former Rocket Lab engineers and executives, who confirmed these delays.

Bleecker also raised concerns regarding Rocket Lab’s business model and market positioning. The report questioned the robustness of its customer list and indicated that the company may be engaging in underpricing its launch services, which typically range between $50 million and $55 million per launch.

Financial concerns were another focus, particularly regarding Rocket Lab’s cash reserves and burn rate. As of September 2024, the company reported having $504 million in cash but will likely need an additional $300 million to $600 million to bring Neutron to profitability, which might require seeking further funding before the anticipated launch.

The adverse effects of Bleecker Street’s report reverberated throughout the market, resulting in 29.09 million shares of Rocket Lab changing hands, significantly higher than the three-month daily average of 19.74 million shares. Following the negative press, shares rallied slightly in pre-market trading with a 5.28% increase; however, the overall outlook remains precarious amid investor uncertainty.

Wall Street analysts maintain a cautiously optimistic view of Rocket Lab, evidenced by five buy ratings and two holds in the last three months. The average price target is set at $27.08, suggesting a potential 33.53% upside if the company’s launch goals are met.

In light of the stock’s volatility, the U.S. law firm Block & Leviton announced it is investigating potential securities law violations by Rocket Lab, particularly in response to the share price drop associated with Bleecker Street’s critical report.

As Rocket Lab continues to navigate these turbulent waters, the success of its Neutron rocket, intended to compete in the growing market for medium-lift launch services, will be crucial in determining its future viability.