Rocket Lab USA Plunges 10.93% Amid Neutron Rocket Concerns

Rocket Lab USA Inc. experienced a significant drop of 10.93% in pre-market trading on April 7, 2025, reflecting investor concerns and market volatility.

Rocket Lab USA has been approved to compete for a $5.6 billion launch contract from the United States Space Force. This contract, part of the National Security Space Launch (NSSL) program, involves high-priority national security missions and has a five-year ordering period through 2029. The contract could potentially expand through 2034, making it a substantial opportunity for the company.

However, Rocket Lab faces a challenge with its Neutron rocket, which is still under development and testing. The success of this rocket is crucial for the company to secure government and commercial contracts. Investors are closely watching the progress of the Neutron rocket, as its reliability and performance will significantly impact Rocket Lab's future revenue and market position.

Despite the potential of the Neutron rocket, Rocket Lab's stock is currently considered overvalued based on its trailing financial figures. The company has a market cap of $8 billion on $436 million in revenue, with a price-to-sales ratio of 18.4. This valuation reflects the high-risk, high-reward nature of investing in Rocket Lab, as the company operates in a capital-intensive and low-margin business.

Investors are advised to approach Rocket Lab stock with caution, considering it a small position in their portfolio. The company's future performance will depend on its ability to successfully launch the Neutron rocket and secure lucrative contracts, which could potentially lead to significant growth and profitability.