Rocket Lab (NASDAQ: RKLB) stock has slipped into a local bear market after falling by 25% from its highest point this year. It was trading at $113.65, with its market capitalization falling from over $86.8 billion to $65 billion. So, will this crash continue further or rebound?
Why Rocket Lab and other space stocks have plunged
The ongoing Rocket Lab stock weakness has coincided with the retreat of other companies in the industry. Planet Lab stock retreated from the year-to-date high of $51.7 to $32, while Virgin Galactic (SPCE) fell by 54% from $8.90 to $4.12.
Other top companies in the space industry have all plunged in the past few weeks as investors waited for the upcoming SpaceX IPO.For example, the closely-watched Procure Space ETF (UFO) has dropped from a high of $68.30 to $54.85. Also, the Tema Space Innovators (NASA) stock retreated from $42.65 to $33.3.
Therefore, the ongoing RKLB stock crash is happening as investors book profits after the recent surge. Before the pullback, it was up by over 3,435% from a low of $4.26 in 2024 to a high of $150 this year.
This surge has propelled its market capitalization from under $1 billion during that period to more than $65 billion today. It is common for stocks to pull back after such a strong rally, especially when a major news event is approaching.
In this case, that event is the upcoming SpaceX IPO, which is expected to be the largest IPO in history, with the company seeking to raise more than $75 billion. Since space stocks jumped ahead of the IPO and are likely falling as investors book profits.
READ MORE: Rocket Lab stock has gone parabolic: why the SpaceX IPO may trigger a crash
Rocket Lab’s business is doing well
For starters, Rocket Lab is one of the biggest players in the space industry, where it offers end-to-end services to companies and governments. It offers launch services, spacecraft design and manufacturing, and optical systems.
Rocket Lab started its business with the Electron, which has been its workhorse for years. Electron has a payload of 300 kilograms. Neutron, its next main platform, will have a 8,000 kg payload.
The most recent financial results showed that its business was doing well, with its revenue rising by 63.5% in the first quarter and the number of launches rising to 6. It ended the quarter with a backlog of over 70 launches.
Its revenue rose to $200.3 million from $122 million in the same period last year. This revenue was about 11.5% increase from the previous quarter.
Analysts believe that the company’s business will continue doing well this year. The average estimate is that its revenue will come in at $231 million, up by 60% YoY. Its annual revenue is expected to jump by 52% to $914 million, followed by $1.29 billion next year.
RKLB stock price technical analysis
Rocket Lab stock chart | Source: TradingView
The daily chart shows that the Rocket Lab stock price has pulled back in the past few days, moving from the year-to-date high of $151 to $113 today. On the positive side, the stock has remained above the 50-day Exponential Moving Average (EMA). It is also slightly above the key support level of $100, its highest point on January 16.
The Relative Strength Index (RSI) has moved below the neutral level of 50. Therefore, the most likely scenario is where the RKLB stock retreats to $100 and then resumes the uptrend as investors buy the dip.
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