Shares of Rocket Lab USA (RKLB) fell 12% on Wednesday, despite little direct news about the space company. The company has long positioned itself as a challenger to Elon Musk's SpaceX. So, RKLB's stock plunge may have been triggered by recent SpaceX news. Looking ahead, Wall Street's still pretty upbeat on RKLB, and the recent dip might just give investors a nicer entry point. As of Thursday's pre-market session, the stock had rebounded 2.7%.
For context, Rocket Lab is a space launch company specializing in small orbital rockets and satellite solutions, best known for its Electron rocket and upcoming Neutron launch vehicle.
On Wednesday, the FAA approved a plan to more than double the number of SpaceX's Falcon 9 launches from Florida. Notably, the Falcon 9 is expected to be the main rival to Rocket Lab's upcoming Neutron rocket, and the expanded launch approvals give SpaceX a bit more of a head start.
While it's hard to pin Rocket Lab's sell-off on what seems like a routine regulatory update, the move is notable.
RKLB shares are up more than 70% year-to-date. Several analysts have recently raised their price targets, citing optimism about Rocket Lab's long-term growth despite the company reporting mixed Q2 results last month. Confidence also remains strong in Rocket Lab's upcoming Neutron launch, scheduled for late 2025.
Recently, five-star-rated analyst Sujeeva De Silva from Roth MKM raised his price target from $50 to $60 with a Buy rating. De Silva is impressed with the company's progress toward its first Neutron launch. In a research note, he highlighted that both the Neutron support systems and launchpad infrastructure are already in place, boosting confidence in the rocket's development.
That said, cautious investors may choose to wait for Neutron's first successful flight before committing, as the stock remains volatile.
According to TipRanks, RKLB stock has received a Strong Buy consensus rating, with nine Buys and three Holds assigned in the last three months. The average price target for Rocket Lab is $30.20, suggesting a potential downside of 8% from the current level.