The Great Rocket Lab Correction: When Hype Meets Reality

Rocket Lab (NASDAQ: RKLB) experienced a dramatic reversal in late 2025, shedding 38% of its value over just one month—a stark reminder that even promising aerospace companies aren’t immune to market corrections when expectations spiral too far ahead of execution.

A Spectacular Rise Followed by a Hard Landing

The year started with genuine excitement. Rocket Lab stock surged 176% from January through mid-October, riding on anticipation for the company’s Neutron launch—an orbital-class, medium-lift, reusable rocket designed to launch and return to Earth. The stock hit an intraday peak of nearly $74 on October 15, only to slide below $43 by late November. That $26 price collapse happened for one simple reason: the momentum broke.

But there’s more beneath the surface. CEO Peter Beck revealed in November that Neutron’s inaugural launch would slip into early 2026—a delay that rippled through analyst expectations and spooked retail investors who had piled in during the euphoric phase.

The Real Story Behind Rocket Lab’s Business

Strip away the stock price drama, and Rocket Lab has legitimate accomplishments worth examining:

• Over eight years of operations, the company has successfully conducted 75 Electron rocket launches, achieving roughly a 93% success rate, with most flights reaching orbit
• Annual revenue has expanded 15-fold over five years
• The company has transitioned from gross losses to a 32% gross profit margin
• Launch cadence continues accelerating, with Beck projecting at least 20 launches in 2025 alone

The Electron symbol represents the company’s operational workhorse—and it’s working. The real catalyst for profitability hinges on Neutron’s commercial deployment, which analysts forecast could trigger GAAP profitability and positive free cash flow by 2027.

Yet here’s where the market got ahead of itself.

The Valuation Problem Nobody’s Discussing

Before the Neutron delay, Rocket Lab was trading at roughly 63 times its annual sales—a multiple reserved for companies executing flawlessly quarter after quarter. With $555 million in trailing annual revenue and a market cap near $23 billion, the stock still commands a 40x price-to-sales ratio even after its 38% collapse.

The problem is simple: without Neutron flying, profitability delays. Without clear profitability visibility, that 40x multiple looks expensive rather than justified. Wall Street analysts who cheerleaded buys at $74 have gone conspicuously quiet at $43—a pattern that says everything about their confidence in the current valuation.

What Investors Should Actually Be Watching

For existing shareholders, the long-term thesis remains intact—Rocket Lab’s business model works, and Electron continues delivering. For new investors considering entry after this correction, the calculus is trickier.

A one-year Neutron delay isn’t catastrophic in the grand scheme of a long-term space company, but it does reset the profitability timeline. Until Rocket Lab actually proves it can generate GAAP profits, the stock remains a speculative play masquerading as a fundamental investment opportunity.

The retail investors who capitalized on the momentum wave between January and October made excellent returns. Those considering entry now should wait for either concrete Neutron launch success or a dramatically lower entry price—because at a 40x sales multiple without near-term profitability, the risk-reward still skews toward downside.