RocketLab USA's (NASDAQ: RKLB) rising stock price rocketed into reverse Tuesday, falling 5% through 1 p.m. ET despite some objectively good news for the small space rocket manufacturer.
On X last night, Rocket Lab CEO Peter Beck posted a pair of "how it started, how it's going" images showing first himself three years ago at the announcement of his plans to build a new medium-size reusable Neutron rocket to compete with SpaceX's Falcon 9, and then a Rocket Lab worker measuring the inside of an apparently complete fairing for an actual Neutron rocket that is now in production.
How it started v How it's going.
-- Rocket Lab (@RocketLab) August 12, 2024
Flight hardware is in production for Neutron's reusable fairing. Humans for scale. pic.twitter.com/W5qYWIqTPg
Why is that 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 in orbit.
This was Rocket Lab's ninth launch this year, nearly equaling the 10 rockets launched in all of last year. And Rocket Lab also said its "launch cadence continues to ramp up" and promised "many more missions ... in the coming weeks and months."
Still, Rocket Lab had already enjoyed three straight days of stock price gains in a run-up that began even before it reported strong second-quarter financial results last week, with sales growth of 71%. Today's retreat almost looks like an example of investors buying the rumor, and selling the very 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 higher.
While the company is not yet profitable, Neutron is the rocket most analysts believe will make Rocket Lab profitable. The more progress Rocket Lab makes on Neutron, the more likely this stock will turn out to be a buy.
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Rich Smith has positions in Rocket Lab USA. The Motley Fool recommends Rocket Lab USA. The Motley Fool has a disclosure policy.
