Rocket Lab (RKLB) Falls 8.4% as Sector Rotation, SpaceX IPO Anticipation and Geopolitical Jitters Weigh on Shares

Rocket Lab shares have recently come under pressure as investors rotated within the space sector ahead of a potential SpaceX IPO and reacted to heightened geopolitical tensions in the Middle East, including an incident in which Iran reportedly shot down a U.S. helicopter over the Strait of Hormuz. The weakness appears to be driven more by broader market and sector sentiment than by any deterioration in Rocket Lab’s underlying business. The company continues to show operational momentum, with an expanding backlog, new defense and space systems contracts, and record quarterly revenue supporting its long-term investment case.

The central thesis for Rocket Lab remains tied to its ability to turn a growing contract backlog and expanding space systems segment into sustainable cash generation, while also advancing its Neutron rocket program toward market entry. Neutron remains the key near-term catalyst, but its delayed debut is now expected in the fourth quarter of 2026. Investors are watching closely for contract ramp-up tied to the rocket’s development and eventual commercialization. At the same time, the main risk remains elevated spending on Neutron and capital expenditures, along with potential equity issuance that could increase dilution and extend the company’s path to profitability.

A recent internal management change has also attracted attention. Rocket Lab appointed Agostino Ricupati as chief accounting officer, a move that may matter more during a period of heavy government program activity, complex trading in stock-related options, and continued use of at-the-market equity financing. A seasoned accounting executive could help strengthen oversight of global reporting, controls, and the presentation of cash burn and project timing, especially as investors evaluate the real economics of Neutron and acquisitions such as Mynaric.

While enthusiasm around Neutron remains strong, the company’s valuation debate is widening. One set of forecasts suggests Rocket Lab could reach about $1.7 billion in revenue and $167.5 million in earnings by 2029, implying a fair value around $103.91 per share, close to its current price. However, more cautious analysts see a far less optimistic outcome, projecting roughly $1.3 billion in revenue and only about $16.4 million in earnings by 2028. That gap highlights how differently the market is pricing Rocket Lab’s future, particularly as investors weigh the potential upside from Neutron and government contracts against the uncertainty of execution, spending, and dilution.

In this environment, the stock’s recent decline may reflect a broader reassessment of space-sector names rather than a change in Rocket Lab’s business fundamentals. Its backlog, contract wins, and revenue growth suggest the company remains on a constructive operating path. But the next phase of the investment story will depend on whether Rocket Lab can convert momentum into durable profitability and deliver Neutron on schedule.