Rocket Lab USA Tanks After Test Setback, Despite Win

Rocket Lab USA ( (RKLB) ) has fallen by -7.68%. Read on to learn why.

Rocket Lab USA shares fell 7.68% over the past week as investors reacted nervously to a testing setback on the company’s next-generation Neutron rocket, despite continued operational progress with its workhorse Electron vehicle. The decline follows news that the Stage 1 tank for Neutron ruptured during a hydrostatic pressure test, raising concerns about possible delays to the rocket’s inaugural launch, which had been targeted for the second quarter of 2026. Markets typically punish schedule risk in high-growth space companies, and the potential knock-on effect — including the likelihood that a second Neutron launch in 2026 may now be off the table — weighed on sentiment.

Rocket Lab USA has stressed that the rupture occurred while pushing the tank beyond normal operating limits, a common step in validating safety margins, and reported no significant damage to test structures or facilities. The company also noted that the next Stage 1 tank is already in production and that the broader Neutron development campaign remains on track pending a full data review. Investors are now looking to the upcoming fourth-quarter 2025 earnings update in February for clearer guidance on how the incident will affect the Neutron schedule and the company’s revenue ramp from medium-lift missions.

At the same time, Rocket Lab USA continues to demonstrate strength in its core launch business, successfully completing its first launch of 2026 and the 80th Electron mission from its New Zealand site, placing two satellites into a high-altitude orbit for new customer Open Cosmos. Analysts remain broadly constructive: TD Cowen reiterated a Buy rating, while another recent target of $120 underscores confidence in the company’s long-term prospects, even as Spark’s AI-based assessment sits at Neutral due to ongoing losses and negative cash flow. With solid technical momentum and a record backlog but fresh questions around Neutron timing, the recent 7.68% pullback reflects a market recalibrating near-term expectations rather than abandoning the Rocket Lab USA growth story outright.