Key Points
- Shares of Rocket Lab USA have dropped close to 40% from its recent 52-week and all-time high.
- Wall Street remains strongly bullish, with multiple analysts raising price targets and institutional ownership climbing to nearly 72%.
- Despite a slight Neutron delay, Rocket Lab continues to post record revenue, a $1.1B backlog, and strong liquidity.
Rocket Lab (NASDAQ: RKLB) has been one of the most explosive names in the aerospace and defense sector over the past year. The company has transformed from a niche small-cap into a mainstream space-industry favorite, now carrying a roughly $23 billion market cap. Just weeks ago, RKLB was printing new all-time highs ahead of earnings. And while the company ultimately delivered strong results, beating expectations on both EPS and revenue, the stock has since fallen more than 40% from its highs.
Yet even after this sharp correction, RKLB remains up more than 120% over the past year and 71% year to date. For investors who had been waiting months for a meaningful pullback, this is the first real opportunity to reassess the stock. The key question now: Is this sell-off a long-term buying opportunity, or has market sentiment shifted in a way that should concern investors?
To begin answering that, it’s worth looking at what Wall Street thinks.
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Wall Street Sentiment Is Still Firmly Bullish
Despite the volatility, analysts have remained overwhelmingly upbeat. Following the earnings release, several firms raised or reiterated their bullish calls on RKLB.
Stifel Nicolaus reiterated its Buy rating and lifted its price target from $65 to $75, implying nearly 45% upside at the time. Roth Capital maintained its $75 target, while Needham & Company boosted its target from $55 to $63 and kept a Buy rating. The latest round of revisions has raised the stock's consensus price target to an all-time high of $58.17, representing roughly 33% upside from Wednesday’s close.
Institutional positioning reinforces this view. Over the past 12 months, funds have poured $3.5 billion into RKLB versus $1.9 billion in outflows. Institutional ownership now sits near 72%, a strong sign that long-term money still sees the company’s trajectory pointing higher.
Neutron Delay Aside, Rocket Lab’s Growth Story Is Intact
Rocket Lab’s Q3 results highlighted just how quickly the company continues to scale. Revenue came in at a record $155.08 million, up 48% year over year and above estimates. Growth was driven by strength in both Electron launch activity and continued expansion within the Space Systems division.
Space Systems, satellite manufacturing, spacecraft components, and government/commercial programs remain a powerful growth engine. Meanwhile, the Launch Services segment nearly doubled revenue year over year, driven by a packed manifest and strong customer demand.
The company closed the quarter with more than $1.1 billion in contracted backlog, a large portion of which is expected to convert to revenue over the next year. Liquidity is also in excellent shape: Rocket Lab now holds over $1 billion in cash and marketable securities following its recent equity raise. This gives the company flexibility to continue scaling Neutron development and investing in manufacturing without short-term financing pressures.
For Q4, Rocket Lab guided revenue between $170 million and $180 million, another quarter of sequential growth. Management also noted that spending on Neutron is nearing its peak, which means cash burn should begin moderating.
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A Healthy Pullback in a Strong Long-Term Story
Rocket Lab’s recent 40% decline is significant, but the underlying fundamentals and long-term growth story remain undamaged. Analyst confidence is near its highest level ever, institutional ownership continues rising, and the company is expanding at a pace rarely seen in the aerospace sector.
From a technical perspective, the $40 support level, sitting just above the 200-day SMA, is a significant line in the sand in the future. If RKLB can reclaim the $50 level, its most recent support before breaking down, then a higher low within its broader uptrend could form, potentially rewarding dip buyers ahead of the expected Neutron maiden launch early next year.
So, for long-term investors, this sell-off may potentially be less of a warning sign and more of an opportunity.
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