Rocket Lab: How Low Can RKLB Stock Really Go?

Rocket Lab’s stock (NASDAQ: RKLB) trended lower following the company’s announcement to raise $750 million through equity dilution. This move, which increases the total number of shares, often concerns investors because it can negatively impact a company’s earnings per share.

The key question is the extent of the downside risk for RKLB stock. Despite its recent decline, the stock still appears overvalued. This overvaluation, combined with the stock’s history of only modest rebounds after previous drops, suggests there is considerable risk. Consider the following information:

• Size: A $24 billion company with $504 million in revenue currently trading at $47.24.
• Fundamentals: Revenue growth over the last 12 months of 54.4% and an operating margin of -44.1%.
• Liquidity: Debt to Equity ratio stands at 0.02 and Cash to Assets ratio is 0.44
• Valuation: Currently trading at a P/E multiple of -105.2 and a P/EBIT multiple of -110.4
• Has provided a median return of 1.7% within a year after significant dips since 2010. See RKLB Dip Buy Analysis.

While we prefer to purchase dips if the fundamentals are solid – for RKLB, see Buy or Sell RKLB Stock – we are cautious of falling knives. Specifically, it is crucial to determine if the situation deteriorates significantly, leading to an additional drop of 20-30% to the $33 level, and whether we will be able to retain the stock. What is the worst-case scenario? We refer to this as downturn resilience.

Below is an in-depth analysis of Rocket Lab’s downturn resilience – particularly, its performance in comparison to the market during previous crises. It turns out that the stock experienced an impact that was slightly better than the S&P 500 index during various economic downturns. We evaluate this based on (a) the extent to which the stock fell and (b) how swiftly it recovered.

Below are the specifics, but before that, as a brief background: RKLB offers launch services, small orbital vehicles, and satellite platforms for commercial, aerospace, and government space and defense sectors.

2022 Inflation Shock

• RKLB stock declined by 82.8% from a peak of $20.72 on September 9, 2021, to $3.56 on December 27, 2022, compared to a peak-to-trough drop of 25.4% for the S&P 500.
• However, the stock fully regained its pre-Crisis peak by November 21, 2024
• Since then, the stock rose to a high of $54.04 on September 15, 2025, and is currently trading at $47.24

2020 Covid Pandemic

• RKLB stock dropped by 3.2% from a high of $10.44 on December 16, 2020, to $10.11 on December 31, 2020, compared to a peak-to-trough decline of 33.9% for the S&P 500.
• Nonetheless, the stock completely bounced back to its pre-Crisis peak by January 13, 2021

Overall, Rocket Lab (RKLB) stock has a history of experiencing significant declines during broader market corrections. While the company has generated investor interest through its successful rocket launches and new contracts—especially for its upcoming Neutron rocket—investors should also be mindful of the potential downside risk.

Concerned that RKLB may decline further? You may want to explore the Trefis High Quality (HQ) Portfolio, which includes a selection of 30 stocks that have historically comfortably outperformed its benchmark, which comprises the S&P 500, S&P mid-cap, and Russell 2000 indices. What is the reason for this? Generally speaking, HQ Portfolio stocks have provided superior returns with lower risk compared to the benchmark index; they offer a steadier ride, as shown in HQ Portfolio performance metrics.