RKLB Drops After Losing $700 Million NASA Contract, Cathie Wood Buys the Dip: Can the Stock Rebound?

TradingKey - On September 1 ET, NASA announced that it awarded a Mars communications contract with a maximum potential value of approximately $700 million to Blue Origin, while Rocket Lab (RKLB) lost the bid.

This news directly triggered a negative market reaction, with Rocket Lab's stock falling 2.16% on the day to close at $62.54. This was RKLB's second consecutive trading day of decline and its ninth decline in the past 10 trading days.

[Source: TradingView]

Neutron Maiden Flight Window Narrows After Losing NASA Mars Communication Contract

The NASA Mars communication network contract has been awarded to Jeff Bezos's Blue Origin. The project covers design, development, integration, launch, and operations, requiring the delivery of a high-performance orbiter by December 31, 2028, with the network expected to become operational in 2030.

Rocket Lab was one of the bidders, with its proposal based on the "Explorer" platform and equipped with an optical communication system. CEO Peter Beck had previously expressed confidence in the bid and hoped NASA would announce its decision as soon as possible. However, NASA ultimately chose Blue Origin.

The lost bid has limited direct impact on Rocket Lab, as market focus remains centered on the progress of its Neutron rocket. Since its announcement in 2021, the maiden flight of Neutron has been postponed multiple times. On January 21 this year, the first-stage fuel tank ruptured during a hydrostatic pressure test, forcing adjustments to the production schedule.

The company stated in its second-quarter earnings report in August that the first Neutron is still scheduled to arrive at the Virginia launch site in the fourth quarter, but after arrival, it will still need to complete steps such as integrated testing, static fire tests, and wet dress rehearsals.

Beck acknowledged that the time window to complete the maiden flight before the end of the year is narrowing. While the company has not officially announced a delay to 2027, the uncertainty surrounding the timing of the maiden flight has become one of the primary risks concerning investors.

Executives Sell Shares to Pay Taxes as Cathie Wood Adds Shares Against the Trend

Recent stock sales by several company executives have also drawn market attention. On August 24, five executives sold a combined 78,843 shares of RKLB stock, valued at approximately $5.49 million. Among them, Chief Operating Officer Frank Klein sold 45,692 shares, worth about $3.18 million.

However, these sales were primarily to satisfy tax withholding obligations arising from the vesting of restricted stock units, with a portion executed pursuant to Rule 10b5-1 trading plans. Following the transactions, the executives involved still hold the vast majority of their previous positions.

Meanwhile, Cathie Wood bought against the trend: On September 1, three ARK ETFs bought a combined 504,799 shares of RKLB stock. Among them, ARKK purchased 420,602 shares, ARKQ bought 60,164 shares, and ARKX acquired 24,033 shares, valued at approximately $31.6 million based on that day's closing price.

The previous day, ARKK had already bought 200,303 shares. Over the two days, they bought a total of 705,102 shares, worth approximately $44.1 million.

Wall Street Generally Optimistic, Highest Price Target Seen at $150

According to data from StockAnalysis, 18 analysts have given RKLB an average 12-month price target of approximately $112.65, representing an upside potential of about 80.12% from its current share price.

[Source: StockAnalysis]

Wall Street is generally optimistic. On September 2, Berenberg initiated coverage of Rocket Lab with a "Buy" rating and a price target of $83.

New Street Research analyst Pierre Ferragu issued a "Buy" rating and a $150 price target, believing that the commercialization of Neutron, the expansion of the space systems business, and penetration into the defense and government markets will drive a valuation re-rating for Rocket Lab in the medium to long term.

Bank of America analyst Ronald Epstein lowered his price target from $115 to $110 on August 31 while maintaining a "Buy" rating. Following the earnings report, Andres Sheppard of Cantor Fitzgerald raised his price target from $96 to $122, viewing Neutron as one of the most important catalysts.

Will RKLB Stock Rebound?

Rocket Lab's second-quarter revenue reached $234 million, up 62% year-over-year; as of the end of June, its backlog stood at $2.36 billion, up 137% year-over-year, with a launch backlog of over 90 missions. Based on operational data, the company's fundamentals are solid, and its order pipeline is strong. Wall Street institutions are also generally bullish on RKLB's future performance.

However, these solid fundamentals and optimistic institutional expectations have not been fully reflected in the stock price. The key reason for the market's wait-and-see stance lies in the progress of the Neutron rocket.

If Neutron can proceed as planned and complete its maiden flight in the fourth quarter of 2026, it could serve as a key driver for the stock price; if further delayed, valuation pressure will persist.

Overall, the impact of losing the NASA contract is relatively limited, and RKLB still retains rebound potential, with Neutron being the key factor determining RKLB's next rally.