Rocket Lab (RKLB) shares have pulled back sharply from their record high of $151, falling to around $100 as investors take profits ahead of the anticipated SpaceX IPO. The decline occurred even as the stock joined the Nasdaq 100 Index, a milestone that typically triggers buying from index-tracking ETFs. Despite the recent weakness, several factors suggest the stock may be poised for a recovery.
Technical Indicators Point to a Bounce
The stock has found support at the 100-day weighted moving average and the $100 level, which previously acted as resistance in January and marks the upper boundary of a cup-and-handle pattern. This price action resembles a break-and-retest pattern, often a precursor to further upside. The Average Directional Index (ADX) has fallen from 43 to 25, indicating the downtrend is losing momentum. Additionally, a falling wedge formation is emerging, a pattern that typically resolves with a bullish breakout. If these technical signals hold, RKLB could retest its year-to-date high of $151 in the coming weeks.
Business Fundamentals Remain Strong
Rocket Lab's operational momentum continues to build. Its Electron launch vehicle is seeing sustained demand from government and commercial clients. The HASTE suborbital variant is also gaining traction, particularly with the U.S. Department of Defense for hypersonic missile testing. Meanwhile, the company is booking orders for its upcoming Neutron medium-lift rocket, which promises to significantly expand its payload capacity.
In the first quarter, Rocket Lab booked 31 missions, and management noted an inflection point in launch activity. A notable 20-launch order from the DoD, valued at $190 million, underscores the company's growing role in national security space. Rocket Lab is also involved in the Golden Dome project, further solidifying its position.
Revenue growth is expected to accelerate. Analysts project 52% growth this year to $915 million, followed by 41% growth to $1.29 billion in the next fiscal year. If this trajectory continues, annual revenue could reach $5 billion within a few years. The upcoming Neutron launch later this year is a key catalyst, as it will enable the company to target higher-margin medium-lift missions and improve profitability.
Risks to the Bullish Thesis
Investors should be aware of potential headwinds. Stocks often retreat after joining a major index like the Nasdaq 100, as seen with Robinhood's post-inclusion decline. There is also a risk that RKLB could enter a distribution or markdown phase under Wyckoff theory, characterized by sharp price drops. Furthermore, the stock trades at a forward price-to-sales ratio of 67, a lofty valuation that leaves it vulnerable to a reset if growth disappoints.
For context on broader market trends, see our coverage of Global Equities Reach Record Highs on Easing Geopolitical Fears and Strong Earnings and 5 Sub-$10 Stocks with Strong Analyst Upside: Quantum, AI, Fintech, Space, eVTOL.
While the recent pullback has tested investor patience, Rocket Lab's underlying business momentum and technical setup suggest the stock may be setting up for a comeback. However, the high valuation and index-entry dynamics warrant caution.
This article is for informational purposes only and does not constitute financial advice.
