Rocket Lab Stock Erases $57 Billion in Value as Headwinds Mount
Rocket Lab (NASDAQ:RKLB) stock broke below a key support level and fell to its lowest point since December 9. The shares dropped to $50.8, more than 66% below their peak for the year. The retreat followed another delay to the company’s Neutron rocket, a move that may lead to higher costs and revenue delay.
Rocket Lab Stock Dropped After Neutron Delay
RKLB stock continued its strong sell-off last week after the company delayed its Neutron, a project it has been working on for years. Neutron is a reusable medium rocket built to move it beyond the small satellite launch it has always been known for. It aims to compete with SpaceX’s (NASDAQ:SPCX) Falcon 9, with its maximum payload being up to 13,000 kilograms.
In a statement this week, Rocket Lab said that it identified an issue that forced it to delay the project’s launch to next year. This is a major disappointment because it has delayed the launch before. Neutron has already secured some major contracts, including a $397 million one to deliver multiple Flatellite spacecraft.
Rocket Lab’s retreat has also coincided with a broader decline across the space industry. SpaceX remains 35% below its peak for the year. Planet Labs (NYSE:PL) has dropped more than 77%, while Intuitive Machines (NASDAQ:LUNR) has slipped 80% from its all-time high.
On the positive side, Rocket Lab’s business is doing well, with its second-quarter revenue rising by 62% to $234 million. Its backlog jumped by 137% to $2.36 billion, a trend that may continue in the coming years.
Rocket Lab also recently announced the $8 billion acquisition of Iridium, creating a vertically-integrated space company that designs, builds, launches, and operates its own constellations.
Most notably, analysts expect that Rocket Lab’s business will continue growing, with its third-quarter revenue expecting to jump 65% to $257 million. Its annual revenue is expected to jump by 60% to $958 million.
RKLB Stock Price Technical Analysis
Technicals suggest that Rocket Lab’s shares have more downside to go in the near term. It has dropped below the important support level of $58.18, its lowest level on July 29 and the 61.8% Fibonacci Retracement level. Dropping below that level is usually a sign that bears are prevailing.
Rocket Lab has also formed a death cross pattern as the 50-day Exponential Moving Average (EMA) crossed the 200-day EMA. The Average Directional Index (ADX) has moved to 19.5 and is pointing upwards.
These technicals suggest that the stock will continue falling, potentially to the 78.6% Fibonacci Retracement level of $35. In the future, however, the stock will likely bounce back as investors buy the dip.
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