Why Rocket Lab Stock Just Crashed

Key Points

• Rocket Lab stock hit an all-time high last night.

• Last night, the company also announced plans to sell some stock.

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Rocket Lab (NASDAQ: RKLB) stock hit an all-time high last night, closing above $54 a share -- and you know what that means.

It's time to sell.

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At least, that's what Rocket Lab seems to think. In an SEC filing last night, the maker of small Electron rockets and developer of the new Neutron medium-lift rocket announced plans to raise up to $750 million in new cash through stock sales.

Now Rocket Lab stock is tumbling, down 9.2% through 11:11 a.m. ET. And why?

Image source: Getty Images.

Rocket Lab's big cash grab

Rocket Lab has lined up an impressive array of a half dozen big banks, from Bank of America to JMP to Needham, to help it sell shares "from time to time" and at whatever price the market will bear.

Notably, Rocket Lab says it's not "obligated" to sell any shares, and it still has nearly $700 million in the bank. Still, the company's burning nearly $200 million a year, according to the latest data from S&P Global Market Intelligence. And Rocket Lab's still working to complete its Neutron rocket -- and hard at work on a number of other space initiatives as well, up to and including pursuing a role in President Donald Trump's Golden Dome missile defense program.

That all costs money -- and so Rocket Lab is securing access to the necessary funds. It doesn't hurt, either, that if and when Rocket Lab decides to sell, it will get more money for its shares than it was ever offered before in its history.

Is Rocket Lab stock a sell?

So this explains why Rocket Lab wants to sell its stock. But should you sell too? Painful as it feels to cash out a stock that seems to go nowhere but up, I think now is a nice time to sell.

The price has never been better.

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Rich Smith has positions in Rocket Lab. The Motley Fool has positions in and recommends Rocket Lab. The Motley Fool has a disclosure policy.