Rocket Lab (NASDAQ: RKLB) saw its shares tumble 8.46% on Friday, closing at $70.65, down from Thursday’s levels. The drop, characterized by unusually light holiday trading volume of just 23.16 million shares, has stirred discussions about the stock’s momentum as we approach the year-end.
Investors have largely attributed this decline to profit-taking amidst thin liquidity, a situation that often inflates price fluctuations during the festive trading periods. This downturn reflects a broader retrenchment across space-sector stocks, which have enjoyed a remarkable year fueled by government spending and a thriving launch schedule.
Rocket Lab USA, Inc., RKLB has faced market volatility, but analysts maintain that the underlying fundamentals are robust. On December 19, the company secured a substantial $816 million prime contract from the U.S. Space Development Agency (SDA), tasked with producing 18 satellites for its Tracking Layer Tranche 3 program.
This contract not only establishes Rocket Lab’s competitive stance alongside defense behemoths like Lockheed Martin and Northrop Grumman but also positions the company to tap into a burgeoning market, with total orders for Tranche 3 totaling around $3.5 billion. CEO Sir Peter Beck emphasized that this deal underscores Rocket Lab’s capacity to function as a vertically integrated national-security contractor. Moreover, potential “merchant supplier” opportunities could increase the total value capture to nearly $1 billion.
Record Launches Highlight Execution Reliability
As Rocket Lab wrapped up 2025, it set a new record with its 21st Electron launch completed on December 21, maintaining a remarkable 100% success rate throughout the year. This string of successes is a key factor in attracting both commercial and government clients, reinforcing confidence in Rocket Lab’s ability to monetize its contracts.
With the company looking ahead to the introduction of its medium-lift Neutron rocket, projected to be operational at Launch Complex 3 by early Q1 2026, investors are keenly watching its trajectory.
Wall Street Divided on Stock Outlook
Investor sentiment is decidedly mixed regarding RKLB’s future. Needham has elevated its price target to $90, citing the implications of the SDA contract and the prospect of subsequent revenue streams. In contrast, consensus estimates from TipRanks and MarketBeat center around a more conservative range of $61 to $68.25. Some analysts, like those at Cantor Fitzgerald, continue to support an overweight position but advise caution at the present price point, urging that sustained operational achievements and revenue growth will be essential to uphold current valuations.
All eyes will be on Rocket Lab’s upcoming Q4 2025 earnings report, expected in early March 2026, for cues on revenue, margins, and EBITDA.
Looking Ahead to Monday Trading
As Rocket Lab enters the new week, investors face a crossroads of short-term volatility versus long-term growth potential. Key indicators to monitor include whether the stock can recover above recent selloff levels, the fulfillment of SDA contract milestones, initial results from the Neutron launches, and broader developments within the space tech sector. Despite the recent downturn, Rocket Lab’s narrative remains tied to tangible progress and an expanding footprint in the defense space, likely to continue appealing to institutional investors interested in a dynamic, growth-oriented aerospace firm.
In summary, while Rocket Lab’s stock has encountered a notable end-of-year correction, its robust operational track record and a solid pipeline of defense contracts continue to bolster a favorable long-term outlook as it embarks on 2026.
