Why Rocket Lab stock fell 5% on Tuesday

Rocket USA Laboratoryhis (RKLB -5.27%) The stock’s gains reversed on Tuesday, down 5% by 1:00 PM ET, despite some objectively good news for the small space rocket maker.

Last night at X, Rocket Lab CEO Peter Beck posted a pair of “how it all started, how it all works” images that first showed themselves three years ago when announcing its plans to build a new medium-sized reusable Neutron rocket to compete with SpaceX. Falcon 9, and then a rocket lab worker measuring the inside of a seemingly complete fairing for an actual Neutron rocket now in production.

How it started v How it goes.

Flight hardware is in production for the Neutron reusable fairing. People for scale. pic.twitter.com/W5qYWIqTPg

— Rocket Lab (@RocketLab) August 12, 2024

Why is it bad news?

Rocket Lab is down despite the news, and it’s not obvious why — especially when Rocket Lab’s Neutron progress is viewed in the context of the continued strength of the company’s Electron program. Just two days ago, Rocket Lab announced the success of its latest launch for Capella Space, putting another of the American company’s synthetic aperture radar satellites into orbit.

This was Rocket Lab’s ninth launch this year, nearly matching the 10 rockets launched in all of last year. And Rocket Lab also said its “launch cadence continues to increase” and promised “many more missions … in the coming weeks and months.”

However, Rocket Lab has already enjoyed three straight days of share price gains in a period that began just before it reported strong second-quarter financial results last week, with sales up 71%. Today’s pullback almost looks like an example of investors buying the rumor and selling the really good news.

Is Rocket Lab stock a buy?

The question for investors is where Rocket Lab stock goes from here — and call me an optimist, but I think it’s going to go up.

Although the company is not yet profitable, Neutron is the rocket most analysts believe it will be do what Profitable Rocket Lab. The more progress Rocket Lab makes on Neutron, the more likely this stock will be a buy.