Rocket Lab Stock Fares Better Than Its Rocket

Rocket Lab’s (Nasdaq: RKLB) latest Electron launch attempt Sept. 19 ended in failure and mission shutdown after an anomaly was discovered shortly after the rocket reached Max Q. The failure was Rocket Lab’s second since announcing their intentions to go public via SPAC with Vector Acquisition Corp. in spring 2021. Investors were quick to pounce on the failure, with shares down as much as 25% in pre-market trading, but ultimately, Rocket Lab’s stock fared better than its rocket, posting just shy of an 8% drop on the next trading day after the failure.  

While we may be the first to assert that an 8% single-day drop in a stock is a “good” thing, compared to other launch companies, it is. Investors were far more punishing of Astra’s 2022 failures, as well as Virgin Orbit’s failure earlier this year – to the tune of 2 – 3x worse than what $RKLB experienced this week. It appears investors are less concerned about Rocket Lab’s five failures in 41 launches than Astra’s seven failures in nine launches or Virgin Orbit’s two failures in six launches (understandably so).  

Source: MarketWatch Historical Price Tables

If nothing else, Cathy Wood certainly was not deterred, as ARKX purchased an additional ~73k shares after the dip. With nearly 17M Rocket Lab shares trading hands on 09/19/2023, ARKX wasn’t actually a needle-mover, but it certainly bolsters investor confidence that this launch failure isn’t all that much to worry about. From the Quilty perspective, with this being their 41st launch and the failure bringing them below the 90% threshold (88% to be precise), it’s setting up to be a pivotal year for Rocket Lab in 2024. A few successful launches should bring them back into favor with insurers, but any additional failures could send their rates uncomfortably high. Going forward, The question isn’t “Will they survive?” but “How much revenue will they lose in the short term?” And “How quickly can they get back up and running without risking more failures?” 

• Rocket Lab’s Electron rocket launch on Sept. 19 experienced an anomaly shortly after hitting Max Q, rendering the mission a failure and destroying Capella Space’s second Acadia synthetic aperture radar (SAR) imaging satellite.

• Unlike its rocket, $RKLB stock fared quite well comparatively – only an 8% drop the day following the failure compared to 14%, 24%, and 26% declines experienced by competitors.

• Rocket Lab has already stated its intent to revise its Q3 guidance in the coming days; as more information reaches the market, expect the stock to price this in accordingly.

SOURCE: https://www.space.com/rocket-lab-electron-launch-failure-september-2023