Key Takeaways
- Rocket Lab stock fell 29% in the month through October 22, largely reflecting concerns over the delayed launch of its Neutron rocket.
- Management has tied positive adjusted EBITDA to the quarter after Neutron’s first successful flight, pushing its profitability timeline into 2027.
- Despite the selloff, Rocket Lab traded at 27x forward sales, above its five-year average of 21x.
- With third-quarter earnings scheduled for November 9, Rocket Lab looks more like a hold than an aggressive buying opportunity.
Rocket Lab (RKLB) stock fell 29% in the month through October 22, closing at $51.22 as investors reassessed the company’s growth outlook following another delay to its Neutron rocket.
Neutron’s Delayed Launch Pushes Back Profitability
Rocket Lab announced on October 14 that Neutron’s first launch would move into 2027 after inspectors discovered tiny voids between carbon fiber layers in a dome for the rocket’s first-stage tank.
CEO Sir Peter Beck explained that the defects did not necessarily mean the component would fail, but the company was unwilling to compromise on reliability.
“Possible success isn’t our standard,” Beck said.
CFO Adam Spice has tied positive adjusted EBITDA to the quarter following Neutron’s first successful flight, making the second quarter of 2027 the earliest possible milestone.
Positive free cash flow could follow approximately 18 to 24 months afterward.
Second-quarter revenue increased 62% to a record $234 million, while backlog reached $2.36 billion. The company held approximately $2.4 billion in cash and investments, providing financial flexibility despite negative quarterly free cash flow of $110.1 million.
Wall Street expects annual revenue to increase from $602 million in 2025 to approximately $1.33 billion in 2027.
However, those forecasts could face downward revisions. Citizens JMP lowered its price target from $130 to $90, citing the delay’s impact on expected launch revenue in 2027 and 2028.
Is Rocket Lab Stock Undervalued After the Selloff?
Despite falling 29%, Rocket Lab still looks expensive relative to its historical valuation.
As of October 22, shares traded at approximately 27x forward sales, below their May peak of 89x but above their five-year average of 21x.
Rocket Lab reports third-quarter earnings on November 9, with revenue guidance between $250 million and $265 million.
For now, Rocket Lab looks more like a hold than a stock to sell or aggressively buy. Strong revenue growth, a $2.36 billion backlog, and substantial liquidity support the business, but Neutron’s uncertain timeline and premium valuation make buying immediately less attractive.
So what is Rocket Lab stock actually worth?
TIKR lets you forecast the future price of any stock in less than a minute. Just enter a few assumptions into TIKR’s valuation model and see what Rocket Lab could be worth. Start from Wall Street consensus estimates, or adjust the inputs to reflect your own view of the business. It’s free to use.
Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any of the stocks mentioned. Thank you for reading, and happy investing!
