Rocket Lab Stock Stumbles After Blue Origin Blast, But Record Backlog and Neutron Countdown Keep the Narrative Alive

The space sector’s recent rally hit a wall Monday, with Rocket Lab USA absorbing a 13% sell-off that sliced its shares to $124.03 after touching an intraday low of $122.58. The trigger came from outside the company: a fiery hotfire test failure at Cape Canaveral on Friday that destroyed Blue Origin’s New Glenn rocket, sending capital scurrying out of launch-exposed names. Yet beneath the surface, the company’s operational momentum remains strong, with a $2.2 billion backlog, a freshly closed robotics acquisition, and the long-awaited debut of the Neutron rocket looming later this year.

The sector rotation was indiscriminate in its severity. AST SpaceMobile sank 9% to $103.50, Planet Labs gave up 8% to $46.85, and Rocket Lab took the hardest hit of the group. Virgin Galactic, by contrast, caught a bizarre bid, surging 18% to $7.28 as some investors bet the company could benefit from Blue Origin’s setback. Analysts largely viewed the move as a short-term rotation from a red-hot space trade rather than a fundamental rupture of the investment thesis.

The numbers from Rocket Lab’s first quarter underscore why the stock had been on such a tear. Revenue hit $200.4 million, a 64% jump from a year ago, with a net loss of $45 million that narrowed as margins improved. The order book swelled to a record $2.2 billion — more than double the prior year — and management sees roughly 36% of that converting to revenue in the next twelve months. For the current quarter, they are guiding to $232.5 million in sales and flagging positive EBITDA by year-end.

Defense contracts remain a durable anchor. Rocket Lab recently passed the System Requirements Review for the Space Development Agency’s Tracking Layer Tranche 3 constellation, a program worth about $816 million. That brings the company’s total SDA award haul to over $1.3 billion, reinforcing its position as a Pentagon supplier beyond launch.

Should investors sell immediately? Or is it worth buying Rocket Lab USA?

May also brought the completion of the Motiv Space Systems acquisition, now rebranded Rocket Lab Robotics. The California-based firm specializes in space robotics, motion control, and precision mechanisms — its technology already powers robotic arms and drive electronics on NASA’s Perseverance Mars rover and the CADRE lunar vehicles. With the deal, Rocket Lab can now manufacture Solar Array Drive Assemblies in-house, components that orient satellite solar panels toward the sun. The company joins a small global club capable of delivering end-to-end Mars missions: launch vehicle, spacecraft, software, and Mars-proven robotics for surface and orbital operations.

All eyes are now on the Neutron rocket’s maiden flight, which slipped to the fourth quarter after a tank failure in January. A successful first flight would make Rocket Lab the only Western alternative to SpaceX in the medium-lift segment. Expectations are high, and any failure would likely compress the stock’s premium multiple.

That multiple is already drawing scrutiny. The shares, which topped $150.23 on May 27 for a 52-week high, now trade 17% below that peak. Even after Monday’s drop, they have gained 63% year-to-date and 366% over the past twelve months. The market capitalization settled at roughly $83 billion before the sell-off, implying a forward enterprise-value-to-sales ratio of 78 times 2026 revenue — well above the sector average in the high tens. Eighteen analysts average a “Buy” rating, but their mean price target of $103.91 points to a 27% downside from current levels.

The elephant in the room remains the SpaceX IPO. The listing, potentially the largest in Wall Street history with an issue size up to $75 billion, is expected to begin formal marketing on June 4 and price around June 11. SpaceX is reportedly targeting a valuation of at least $1.8 trillion, a slight comedown from earlier whispers of $2 trillion. Rocket Lab shares have ridden this wave, surging roughly 95% this year as retail investors treated it as a proxy for SpaceX. Once the pricing is locked in, the “sell the news” dynamic could drain momentum from the entire space cohort.

Rocket Lab USA at a turning point? This analysis reveals what investors need to know now.

Inside selling adds a modest cautionary note. Cathie Wood’s ARK Invest unloaded 365,680 Rocket Lab shares in May across its ARKX and ARKQ ETFs, a pattern ARK follows after significant rallies. The company itself sits on $1.21 billion in cash against just $138.67 million in debt.

Monday’s sell-off looks less like a vote of no confidence in Rocket Lab’s business and more like profit-taking triggered by an external event in a sector that had baked in multiple catalysts. The next few weeks will test whether the Neutron countdown and the SpaceX listing can reignite the rally — or force a reassessment of the valuation.

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