Cathie Wood Was Buying RKLB Stock Into the Dip. Peter Beck’s Neutron Comment Explains Why as the Stock Rebounds.
Ahead of its earnings report, Rocket Lab (RKLB) stock jumped about 11% on Nov. 9 as space stocks rallied. Rocket Lab then reported third-quarter earnings, but the market wasn’t immediately convinced.
Rocket Lab posted a loss of $0.12 per share, worse than the $0.07 loss analysts expected. The company still couldn’t provide a firm launch date for Neutron, which is now expected sometime in 2027. As a result, RKLB stock fell more than 6% in after-hours trading. On Nov. 10, though, shares recovered strongly, climbing nearly 7%.
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Why Investors Looked Past the Miss
Since its 52-week high of $151, the price of Rocket Lab stock had been cut by more than half. When a stock crashes this far in a matter of months, the expectations become lower, giving shares room to run.
Meanwhile, although the company missed on earnings, the Q3 report gave investors plenty to cheer. CEO Peter Beck called it a “defining quarter.” Revenue hit $268 million, up 73% year-over-year (YOY), while backlog jumped to a record $3.57 billion. Across all of its rockets, Rocket Lab signed about $1 billion in new launch contracts in the quarter. About half of those contracts were for Neutron, the company’s bigger rocket that hasn’t even launched yet. Neutron now has 16 missions booked before its first flight. On several of these deals, Rocket Lab also raised Neutron’s base price from $55 million to $70 million. So, customers are agreeing to pay more for a rocket that hasn’t flown yet, showing the strength of demand.
Cathie Wood’s Ark Invest has kept buying RKLB stock every time it dips. From late August to early September, Ark Invest bought shares worth about $44 million. During the broader selloff on Nov. 5, Ark Invest bought another $12.7 million, just days before the Q3 report.
The record backlog and higher Neutron prices seem to back up Wood’s bet right now. But I think the risks need to be kept in mind as well. Rocket Lab’s loss was wider than expected, and spending came in above guidance. The biggest risk might still be Neutron, which doesn’t have a firm launch date.
Still, as I wrote last quarter, Rocket Lab’s growth doesn’t just depend on Neutron. Its record Q3 numbers arrived while Neutron was still on the ground, while Beck says the company would be “extremely profitable” without Neutron. So, a delay hurts less than it might seem.
About Rocket Lab Stock
Rocket Lab is best-known for launching small satellites on its Electron rocket, but it also builds the satellites and parts that go into space. Its biggest bet right now is Neutron, a larger rocket that customers are already lining up for before it has launched. Founded in 2006, Rocket Lab is headquartered in Long Beach, California.
RKLB stock is down 13% this year, lagging behind the Procure Space ETF’s (UFO) 4% gain during the same period. Since reaching its all-time high in late May, the stock has plummeted by around 60%. The drop has been due to a few reasons, from its sky-high valuation cooling down to Neutron’s first launch slipping to 2027. Broader sector selloffs have also weighed on RKLB stock.
Rocket Lab is still expensive by most measures. The forward price-to-earnings (P/E) multiple isn’t meaningful since the company isn’t profitable yet, making the price-to-sales (P/S) ratio a better guide. At 65.7 times, the P/S ratio sits considerably above its five-year average.
The EPS outlook shows why investors are willing to pay up. Losses are expected to shrink this year, with loss per share expected to improve 45% to $0.21 in fiscal 2026. The balance sheet is also strong; Rocket Lab holds $4.7 billion in cash against almost no short-term debt. Customers are already paying more for Neutron, so I think where RKLB stock goes from here will likely come down to when the rocket finally flies.
What Do Analysts Expect for Rocket Lab Stock?
Overall, based on 22 Wall Street analysts with coverage, Rocket Lab stock holds a consensus “Strong Buy” rating. The mean price target of $93.24 indicates potential upside of 54% from current levels, while the high target of $120 suggests a possible climb of 99% from here.
On the date of publication, Jabran Kundi did not directly have a position in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. This article was originally published on Barchart.com