Cathie Wood's ARK Investment Management has been buying Rocket Lab (NASDAQ:RKLB) shares during a sharp selloff, adding 705,102 shares over two sessions for roughly $44 million. The purchases come as the stock has fallen in nine of the last ten sessions, with the latest decline triggered by a NASA contract award to Blue Origin and ongoing concerns about delays to the Neutron rocket program.
ARK bought 504,799 shares across three ETFs on Tuesday, valued at about $31.6 million based on the $62.54 closing price. That followed a purchase of 200,303 shares on Monday. The two-day total represents a significant bet by the firm, which is known for its high-conviction positions in disruptive technology companies.
Rocket Lab shares fell 2.2% on Tuesday and slipped further in after-hours trading. The stock is now more than 50% below its May record high, raising the question of whether the selloff has been overdone or if the market is correctly pricing in execution risks.
Wall Street targets remain high, but execution is key
Despite the recent weakness, several analysts have maintained bullish ratings and price targets well above the current share price. Bank of America's Ronald Epstein lowered his target to $110 from $115 on August 31 but kept a Buy rating. The revision partly reflects expectations for a higher share count rather than a deterioration in the company's operating outlook. At Tuesday's close, that target still implies roughly 76% upside.
Cantor Fitzgerald's Andres Sheppard raised his target to $122 from $96 after the company's second-quarter results, calling Neutron "the most material catalyst." He argued that the orbital launch market remains supply-constrained and that Rocket Lab is well positioned through its Electron, HASTE, and future Neutron vehicles.
However, a price target does not guarantee the stock has bottomed. Rocket Lab must still deliver on the growth embedded in those forecasts, and a growing portion of that thesis depends on Neutron's successful debut.
Neutron: the biggest catalyst and the biggest risk
Neutron is designed to move Rocket Lab beyond small launch into the medium-lift market, a segment with significant demand. But the schedule has become increasingly tight. CEO Peter Beck said after the second-quarter report that the window for an end-of-year inaugural launch was "narrowing." The company still needs to complete major testing milestones before flight.
If Neutron performs as intended, the stock could eventually look discounted given the current valuation. But if delays continue, the catalyst supporting some of Wall Street's highest price targets keeps moving further away, prolonging the pressure on the shares.
NASA loss hurts sentiment, but backlog offers support
The latest setback came after Tuesday's close when NASA selected Blue Origin to develop its Mars Telecommunications Network. The firm-fixed-price contract has a maximum potential value of about $700 million and requires Blue Origin to deliver a Mars telecommunications orbiter by the end of 2028. Rocket Lab had been eligible to compete, and the loss adds to negative sentiment.
Still, Rocket Lab ended the second quarter with a record backlog of $2.36 billion, up 137% from a year earlier. The company expects about 45.5% of that backlog to be recognized within 12 months and has more than 90 launches booked across Electron, HASTE, and Neutron. Roth Capital's Suji Desilva cut his target to $110 from $130 but retained a Buy rating, noting that the backlog provides "meaningful near-term revenue coverage."
ARK's buying is notable because it comes during Rocket Lab's weakest stretch in months. While it does not prove the bottom is in, it signals that a prominent growth investor sees value at current levels. The broader market has also been volatile, with tech stocks sliding in early September and yield-driven selloffs affecting sentiment.
Investors will be watching for any updates on Neutron's testing timeline and whether the company can convert its backlog into revenue. The stock's trajectory will likely hinge on execution rather than analyst targets.
This article is for informational purposes only and does not constitute financial advice.
