Rocket Lab (NASDAQ: RKLB) shares tumbled 64.9% to $53.35 on October 16, rattled by a structural flaw discovered in the Neutron rocket’s first-stage propellant tank.
Engineers found voids, described as small air pockets, in the carbon-composite forward dome of Neutron’s propellant tank, requiring a full redesign and process changes.
Rocket Lab disclosed the problem through an 8-K filing with the SEC on October 14, formally pushing the Neutron rocket’s first launch date to 2027.
The delay marks the third time Neutron’s launch timeline has been pushed back, having originally been targeted for 2024, then 2025, and then late 2026.
CNBC’s Jim Cramer delivered a blunt assessment of the situation during the “Mad Money” Lightning Round, telling viewers exactly what he thought of the stock.
“I thought the failure to launch would’ve hurt it more,” Cramer said. “I think you’re getting a great opportunity to sell, sell, sell.”
CFO Adam Spice had previously communicated to investors that a successful Neutron test flight was the key catalyst for the company to turn positive on adjusted EBITDA the following quarter.
With Neutron now pushed to 2027, that profitability milestone shifts further into uncertainty, removing a critical near-term catalyst that had supported the bull case for the stock.
The stock’s struggles were compounded by a broader macro environment, with September CPI coming in above expectations at 3.7% year-on-year, according to the Bureau of Labor Statistics, reigniting fears of additional Federal Reserve rate hikes.
High-growth, loss-making companies like Rocket Lab are particularly exposed to rising Treasury yields, making the timing of the engineering setback especially damaging for investor sentiment.
Rocket Lab’s $8 billion acquisition of Iridium Communications was partly funded through a $1.944 billion equity offering, which added roughly 29.3 million new shares and diluted existing shareholders further.
The balance sheet offers some reassurance, with cash exceeding debt according to Yahoo Finance, but profitability remains out of reach this year and elevated valuation multiples leave little margin for error.
Cramer’s framing suggests the market has not yet fully absorbed the consequences of a third consecutive Neutron delay, and that a more complete repricing may still lie ahead.
The next major catalyst for the stock is expected to be Rocket Lab’s earnings report around November 9, where investors will be watching for updates on Neutron’s redesign progress and Electron’s growing backlog.
