Key Points
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Rocket Lab announced a delay in the launch schedule of its highly anticipated Neutron rocket.
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A manufacturing challenge — since overcome — caused the postponement.
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Rocket Lab is a high-risk, high-reward opportunity that should be part of a well-balanced portfolio.
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Last month was a tough one for Rocket Lab (NASDAQ:RKLB) shareholders, as the stock tumbled 21.5%, according to data supplied by S&P Global Market Intelligence.
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The broader market edged lower last month, with the S&P 500 down 0.9% during the same period. However, the launch and satellite specialist fell much further, as recent developments regarding its Neutron rocket captured the attention of investors.
Image source: Getty Images.
Delay of game
In a press release that dropped on Oct. 14, the company provided an update on the launch of its highly anticipated Neutron rocket. The inaugural launch of the partially reusable medium-lift, two-stage rocket — scheduled for later this year — was pushed into 2027.
Beyond the somewhat terse announcement, CEO Peter Beck appeared in an accompanying video to provide insight into the decision.
We believe Neutron is going to be a game changer, and taking the time now to solve these challenges means we’re in a better position to deliver a rocket that’s ready to meet the needs of the industry for years to come.
The chief executive went on to say Rocket Lab has identified an issue in the manufacturing process that resulted in voids (air pockets) between the layers of carbon fiber in the propellant dome. This could have affected the rocket’s strength, reliability, and durability.
Management noted that Rocket Lab has since corrected the issue after changes to the manufacturing process. Since then, a propellant dome made using a different process has been completed and passed inspection.
Rocket Lab provided another update in a post on X on Oct. 28. The company announced that Neutron’s Stage 2 and Thrust Modules had arrived at the launch complex in Virginia.
To be clear, we don’t know for sure when the Neutron rocket will ultimately fly. Management originally envisioned its inaugural launch in 2024, but the timeline has been pushed back several times as development of the next-generation space vehicle faced challenges. That said, Rocket Lab has been clear that “a reliable rocket is far more valuable than an early one,” and that safety is the company’s top priority.
Is Rocket Lab stock a buy?
With the space race heating up, Rocket Lab is an enigmatic choice for investors. Its plans to acquire Iridium Communications (NASDAQ:IRDM) take it one step closer to its goal of being an end-to-end space company. Progress on the Neutron rocket is slow but sure, and just this week, Rocket Lab announced the 99th successful launch of its Electron rocket.
I can’t stress enough that this is a high-risk, high-reward investment, but as a small part of a well-balanced portfolio, I think Rocket Lab makes an intriguing addition.
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Danny Vena, CPA has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Rocket Lab. The Motley Fool has a disclosure policy.
