Rocket Lab Stock Has Crashed 40%: Should You Buy the Stock Right Now?

Rocket Lab, the innovative space company known for its Electron and Neutron rockets, has seen its stock price plummet by 40% in recent months. This dramatic decline has left many investors wondering whether now is the time to buy or if the stock is destined for further falls. Let's dive into the factors contributing to this crash and explore the potential risks and opportunities for investors.

The Crash: What Went Wrong?

Rocket Lab's stock price has been on a downward spiral. On March 24, 2025, the stock closed at $18.43, a significant drop from $27.62 just 30 days prior and $20.40 a week earlier. This consistent decline indicates a loss of investor confidence and market valuation of the company. But what's behind this crash?



One of the primary factors is the company's financial performance. Rocket Lab's revenue for the 12 months ending Q3 2024 was $363.29 million, a decrease from the previous quarter's $436.21 million. This decline in revenue, coupled with the broader market trends and the performance of its competitors, has contributed to the drop in stock price.

Market Forecasts and Analyst Ratings

Market forecasts for Rocket Lab's stock price show a downward trend. For example, the forecast for March 2025 indicates a beginning price of $20.49, with a maximum of $25.15 and a minimum of $16.40, ending the month at $17.83, which is a 29.1% decrease. This forecast aligns with the actual decline in stock price, suggesting that market analysts had anticipated this drop.

The average analyst rating for rocket lab usa stock from 12 stock analysts is "Buy," but the target prices vary widely. For example, the average target price is $23.95, with a low estimate of $7.00 and a high estimate of $33. This wide range of target prices indicates uncertainty among analysts, which could be contributing to the volatility in the stock price.

Competitive Landscape

Rocket Lab faces stiff competition from larger players in the space industry, such as SpaceX and Blue Origin. These competitors have more resources and established market positions, which could pose a threat to Rocket Lab's growth and market share. For instance, Redwire Corporation's market share within the Aerospace & Defense Industry was 44.91% as of Q3 2024, which is an increase from the previous quarter's 42.35%. This suggests that while rocket lab is facing challenges, its competitors are gaining market share, which could be contributing to the decline in Rocket Lab's stock price.

Opportunities for Investors

Despite the challenges, there are several opportunities for investors considering buying Rocket Lab's stock at its current price.

1. Growth in Revenue and Market Share: Rocket Lab has shown significant growth in revenue, with a 55% year-on-year increase in the third quarter of 2024, reaching $105 million. This growth is driven by strong demand for its launch services and space systems, with a backlog of $1.05 billion. The company's market share within the Aerospace & Defense Industry has also increased, reaching 55.09% as of Q3 2024, indicating a strong competitive position.

2. Innovative Technology and Diversified Product Offerings: Rocket Lab's innovative technology, such as the Electron rocket and the upcoming Neutron rocket, positions it well to capture a broader range of customers. The company's ability to conduct complex missions with tight timetables, as demonstrated by its back-to-back launches for NASA and Astroscale Japan, showcases its agility and precision. This technological edge can attract more customers and drive future growth.

3. Strong Financial Guidance: For the fourth quarter of 2024, Rocket Lab expects revenue between $125 million and $135 million, with GAAP Gross Margins between 26% and 28%. This strong financial guidance suggests that the company is on track to meet its growth targets, providing a solid foundation for future investment.

4. Diversified Customer Base: Rocket Lab's customer base is diversified between government and commercial sectors, with a 70% return customer rate. This diversification reduces the risk of relying on a single customer segment and ensures a steady stream of revenue.

Risks for Investors

However, there are also risks to consider.

1. Volatility in Stock Price: Rocket Lab's stock price has shown volatility, with a decrease of $9.19 over the past 30 days and $1.97 over the past 7 days. This volatility can be attributed to market fluctuations and investor sentiment, which can impact the stock price in the short term.

2. Dependence on Key Customers: While Rocket Lab has a diversified customer base, it still relies on key customers for a significant portion of its revenue. For example, the company has signed a launch service agreement for multiple launches on Neutron with a confidential commercial satellite constellation customer. Any disruption in these key contracts could impact the company's financial performance.

3. Competition from Larger Players: Rocket Lab faces competition from larger players in the space industry, such as SpaceX and Blue Origin. These competitors have more resources and established market positions, which could pose a threat to Rocket Lab's growth and market share.

4. Operational Risks: Rocket Lab's operations involve complex and high-risk activities, such as rocket launches and satellite deployments. Any operational failures or delays could impact the company's financial performance and reputation. For example, the company's ability to conduct multiple launches within a short period, as demonstrated by its record 16 launches in 2024, is crucial for maintaining its competitive edge.

Conclusion

In conclusion, while Rocket Lab presents several opportunities for investors, such as growth in revenue, innovative technology, strong financial guidance, and a diversified customer base, there are also risks to consider, including stock price volatility, dependence on key customers, competition from larger players, and operational risks. Investors should carefully evaluate these factors before making an investment decision.

Ask Aime: Is Rocket Lab a buy now?