Rocket Lab Is Down Half From Its Peak. The Business Never Broke.

Rocket Lab is down more than half from its May 2026 high near $151, and roughly a fifth in the last month alone. That is a lot of tape pain for a company that just reported its best quarter on record. Before you assume the story broke, it is worth separating the two things the selloff actually is: a wounded valuation, and a business that has not stopped improving underneath.

The price cut is easy to explain. SpaceX went public this spring, and the market rebuilt how it prices the whole private-space sector toward platform economics, stripping out the scarcity premium that had partly been a Rocket Lab story. Around the same time, Neutron — the reusable medium-lift rocket that is supposed to be the company's step-change — slipped its debut date againNeutron may yet again be delayed, and that concern keeps resurfacing in the headlines. Market participants described the broader pullback as a sector-wide rotation following the SpaceX IPO. Between those two, investors marked the stock down from a crowded peak.

Here is what is not in the headlines. In the second quarter, Rocket Lab reported record revenue of $234 million, up 62% year over year, with its space-systems product revenue nearly doubling. It closed the quarter with a record backlog of $2.36 billion, up 137% from a year earlierbacklog reached $2.36 billion, up 137% year over year. The company expects roughly 45.5% of that backlog to convert into revenue within the next 12 months45.5% expected to convert within 12 months. That is the concrete bridge the stock's detractors largely ignore: a forward revenue line already under contract, growing faster than the price is falling.

The straight talk I owe you up front: this is not yet a free-cash-flow story. Rocket Lab still burn cash — trailing twelve-month free cash flow was roughly negative $371 million, driven by Neutron development. So the proof point here is not FCF, and I am not going to pretend otherwise. Instead, the case rests on two hard anchors: a $2.1 billion cash pile (the company is effectively debt-free) and a backlog converting toward revenue far faster than the market's mood. That combination buys the company time to finish Neutron without a dilutive scramble, and it turns the valuation argument from "hope on a rocket" into "paying up for a compounding backlog."

The tell on the reset is that the Street has gotten more bullish even as the price fell. Raymond James initiated coverage on September 11 with an Outperform rating and an $80 targetan Outperform rating and an $80 price target, describing a vertically integrated, capital-efficient space platform with strong revenue-backlog growth and a path to profitabilitya vertically integrated, capital-efficient space platform. Berenberg started a Buy at $83 earlier in the monthBerenberg Buy at $83. AInvest's aggregate signal labels the stock Buy. This is not a name the establishment has soured on; the target prices are above the current stock price even as it trades near its 52-week lows by distance-from-high. When prices fall and expressed targets rise, that is an expectations reset, not a broken thesis.

Which brings me to the risk, stated plainly rather than buried. Rocket Lab is still expensive in absolute terms — around 46x enterprise value to trailing sales, and it does not earn a meaningful GAAP profit yet. The stock's rerating depends on execution, not on the multiple compressing to something cheap. The whole case pivots on Neutron. If the inaugural launch slips well past the targeted Q4 2026 pad delivery, or if the backlog fails to convert at the 45.5% pace management expects, then the "improving underneath" part of the thesis breaks, and cutting the position without ego is the right move. The company is already one of only two vendors supplying both launch and spacecraft for a $397 million U.S. Space Force program slated to fly on Neutron, which is a genuine de-risking data point — but it is not a guarantee of the timeline.

The market is still pricing the old risk profile — the peak-growth, post-IPO scarcity trade and the fear that Neutron never lands — while the operating setup is already getting cleaner underneath it. I can be wrong again; Neutron timelines have humbled plenty of people. But the business has not broken. It is compounding a record backlog on a fortress balance sheet, and a falling stock is only an opportunity when price and results diverge the way they do here. The condition that keeps the story alive is Neutron showing up on schedule and the backlog converting. Watch those, not the ticker's daily mood.