The recent decline in Rocket Lab's share value.
Rocket Lab's stock took a nosedive on Tuesday, plummeting almost to ground level, following a damning report from Bleecker Street Research. This research firm, known for publishing "public short ideas" on behalf of its parent company, Bleecker Street Capital, claimed that Rocket Lab's highly anticipated Neutron medium-lift vehicle won't be launching anytime soon. As of 1:15 p.m. ET, Rocket Lab's shares were down a whopping 9%.
Why Does Bleecker Street Hate Rocket Lab's Stock?
Bleecker Street kicks off its report by pinpointing the primary reason for Rocket Lab's soaring stock market value over the past year: investor and analyst excitement over the anticipated launch of Neutron, a medium-lift rocket that Rocket Lab hopes will compete with SpaceX's Falcon 9.
Rocket Lab has been aiming for a mid-2025 first launch for Neutron, with analysts at NextSpaceflight.com marking July as a potential target. However, according to Bleecker, Rocket Lab has been misleading investors about the likelihood of this timeline.
Bleecker equally argues that a mid-2025 launch isn't probable and estimates that Neutron might not even fly until mid-2026, or even later. The short-seller supports these claims by citing conversations with 23 unnamed "rocket experts," who allegedly claim that Rocket Lab's engine development, engine and structure production, launch pad construction, and rocket transport to the launch site are all running behind schedule, making a mid-2025 launch impossible.
Interestingly, some of these "experts" are reportedly "former Rocket Lab engineers and executives."
Should You Sell Rocket Lab Stock?
Bleecker has other concerns about Rocket Lab's valuation as well, challenging its customer list, warning of cut-rate pricing for Neutron, and raising concerns about cash reserves and burn rate. Regardless, Bleecker acknowledges its vested interest in convincing you to sell any Rocket Lab shares you hold, as "funds managed by Bleecker Street are short Rocket Lab." If Rocket Lab stock plummets, it stands to profit.
Does this mean Bleecker is correct? Not necessarily.
Before you sell solely based on Bleecker's arguments, remember that Bleecker isn't exactly an impartial source.
- Bleecker Street Capital, known for its "public short ideas," released a report claiming that Rocket Lab's Neutron medium-lift vehicle might not launch before mid-2026, contradicting the company's stated timeline of mid-2025.
- The report from Bleecker Street Research, which has a financial interest in seeing Rocket Lab's stock decrease, has cast doubt on the likelihood of Rocket Lab meeting its 2025 target for launching the Neutron, citing conversations with 23 unnamed "rocket experts," some of whom are former Rocket Lab engineers and executives.
- Investors who have been pouring money into Rocket Lab stock, fueled by the excitement over the anticipated launch of Neutron, should consider the financial implications of the potential delay before making any decisions about selling their shares.
- With Rocket Lab's stock dropping significantly following the report from Bleecker Street Research, investors might want to reevaluate their investment strategies and consider diversifying their portfolios to include more stable finance options, such as money market funds or government bonds, for the year 2025.
