Signs of a Bottom or More Downside Ahead?

Rocket Lab USA Today

$17.52 -0.91 (-4.94%)

As of 11:39 AM Eastern

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52-Week Range

$3.47

▼

$33.34

Price Target

$23.06

After a stratospheric 2024 that saw Rocket Lab USA Inc. NASDAQ: RKLB shares surge 360% toward the stars, 2025 has been a brutal reentry for shareholders. The stock plummeted 44% from its January 52-week and all-time highs, leaving investors with little to celebrate. But hold on, there’s a glimmer of hope flickering in the void. From a technical standpoint, RKLB is flashing early signs of a bottom, hinting that the freefall might finally stabilize.

So, let’s dig into what a confirmed bottom could look like and whether it makes sense to buy the dip.

Technical Analysis: Rocket Lab Stock Forming a Bottom

Following an extended period trading near $30, where $30 served as a formidable resistance and $25 provided consistent support, Rocket Lab reversed course, initiating a lengthy downtrend yet to be broken. 

Having reached all-time highs in January, the stock has since surrendered nearly 28% year-to-date, though it retains an impressive gain of over 300% from the prior year. The downtrend persists, with the stock positioned below a declining 50-day and 20-day simple moving average (SMA). However, emerging technical signals suggest that a bottom may be taking shape.

A significant support zone around $15, tied to a post-earnings gap from November of the previous year, exists. By late February and early March, the stock twice retreated to this area, and on both occasions, buying interest emerged, reinforcing it as a key support zone. Confirmation of a short-term bottom would require a decisive move above $20, a level that would break the current downtrend and bring the declining 20-day SMA into focus as the next hurdle. 

From a technical standpoint, the $15–$16 range is a critical support threshold. Should this zone fail, the 200-day SMA, currently in the mid-$14s, could serve as the subsequent line of defense and a potential longer-term bottom.

Fundamentally, RKLB Remains Focused Despite Earnings Setback

Despite the latest setback from its Q1 2025 earnings report, Rocket Lab isn’t spooking analysts just yet. Coming off a banner 2024 with shares up 360%, the stock’s plunge from its 52-week highs this year has been triggered by its lackluster earnings report and the broader risk-off sentiment in the market.

In its latest earnings report, Q4 revenue of $132.39 million, up 59.3% year-over-year and edging past the $130.57 million analysts expected, got overshadowed by a grim Q1 outlook: revenue estimated at $117 million to $123 million, well shy of Wall Street’s $135.7 million estimate and an adjusted EBITDA loss of $33 million to $35 million, with non-GAAP gross margins at 30% to 32%.

Add in the Neutron rocket delay, initially scheduled for 2024 but now pushed to late 2025, and it’s understandable why many investors might have lost some confidence. 

But zooming out and looking at the bigger picture, is the story still intact? It appears so. Rocket Lab’s fundamentals hold steady: Neutron’s on the horizon, and its space systems operation keeps chugging. Analysts aren’t deterred, with Citi shaving its target from $35 to $33 but stuck with a Buy rating, shrugging off the delay as space-business-as-usual and flagging this drop as a prime buying window.

Other notable firms covering the stock include Morgan Stanley and Wells Fargo. They have an Equal Weight rating on the company and a price target of $20 and $21, forecasting upside from current levels. 

Based on eleven ratings, RKLB has a Moderate Buy rating and consensus price target of $23.06, forecasting over 25% of potential upside. 

An Enticing Entry Point for the Long-Term Believer

The current market environment remains unforgiving toward high-growth, disruptive companies lacking profitability, as evidenced by Rocket Lab’s significant decline from January’s peak. Yet, this challenging landscape has also created a potential opportunity for investors to gain exposure to one of the most compelling growth stories within the space industry. The long-term outlook holds significant promise.

Should Rocket Lab successfully execute the Neutron rocket launch, now scheduled for the latter half of 2025, and sustain momentum in its space systems division, the present pullback may represent an attractive entry point for those confident in the company’s future. 

However, given the stock’s volatility to market sentiment and the absence of near-term profitability, caution certainly seems justified. Future developments, including updates on Neutron’s progress, will be critical to shaping the stock’s trajectory. From a technical perspective, stabilization above the $15–$16 range, a zone previously demonstrating demand and support, will be an essential indicator to monitor. Its ability to hold this level may signal the beginnings of a more sustained recovery.

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