What’s The Downside Risk For RKLB Stock?

CANADA – 2025/09/16: In this photo illustration, the Rocket Lab logo is seen displayed on a smartphone screen. (Photo Illustration by Thomas Fuller/SOPA Images/LightRocket via Getty Images)

SOPA Images/LightRocket via Getty Images

RKLB stock has dropped 33.3% over the previous 21 trading days. This steep drop is closely associated with renewed investor worries regarding the Neutron rocket program.

The primary concern is the postponement of the inaugural launch of the Neutron rocket, a crucial element of RKLB’s long-term growth plan. The launch has recently been delayed from late 2025 to 2026 in order to emphasize quality and reliability, which consequently raised fears about short-term growth and escalating development expenses. This brings up a pivotal question: Is this softness temporary, or does it signify more profound issues in the investment rationale? Additionally, see Inside the Bitcoin Meltdown: How Two Big Institutions Triggered The Crash.

That said, if you are looking for an opportunity with less volatility than investing in a single stock like RKLB, consider the High Quality Portfolio. This portfolio has significantly outperformed its benchmark, which combines the S&P 500, Russell 2000, and S&P MidCap indexes, achieving returns greater than 105% since its inception. The reason for this? As a group, HQ Portfolio stocks have yielded better returns with lower risk compared to the benchmark index; it’s been a smoother ride, as demonstrated by HQ Portfolio performance metrics.

Before assessing its downturn resilience, let’s examine Rocket Lab’s current position.

• Size: Rocket Lab is a $22 Bil company with $504 Mil in revenue, and is currently priced at $43.62.
• Fundamentals: The revenue growth over the last 12 months was 54.4% and the operating margin stood at -44.1%.
• Liquidity: The company has a debt-to-equity ratio of 0.02 and a cash-to-assets ratio of 0.44.
• Valuation: Rocket Lab stock currently trades at a P/E ratio of -97.1 and a P/EBIT ratio of -102.0. The company is making a substantial and bold investment in its future, primarily indicated by its Research and Development (R&D) expenditures. These investments are chiefly directed towards developing the Neutron rocket and expanding its Space Systems capabilities. The scale of this spending is apparent: R&D expenses for the last twelve months (LTM) amounted to $240 million, which significantly surpassed the company’s gross profit of $176 million during the same timeframe.
• Historically, it has returned a median of 0.8% within a year following sharp declines since 2010. Refer to RKLB Dip Buy Analysis.

These metrics suggest a strong operational performance, coupled with a Very High valuation – making the stock Relatively Expensive. For further information, consult Buy or Sell RKLB Stock.

This leads us to the crucial consideration for investors concerned about this decline: how resilient is RKLB stock if markets deteriorate? This is where our downturn resilience framework becomes relevant. If RKLB stock falls by another 20-30% to $31 – can investors maintain their positions? It appears that the stock demonstrated a slightly better impact than the S&P 500 index during various economic downturns, according to (a) the extent of the stock’s decline and (b) the speed of its recovery. Below, we explore each of these downturns in greater detail.

2022 Inflation Shock

• RKLB stock dropped 82.8% from a peak of $20.72 on September 9, 2021, to $3.56 on December 27, 2022, compared to a peak-to-trough decline of 25.4% for the S&P 500.
• However, the stock fully rebounded to its pre-crisis peak by November 21, 2024.
• Since that time, the stock climbed to a high of $69.27 on October 15, 2025, and is currently trading at $43.62.

2020 COVID-19 Pandemic

• RKLB stock decreased by 3.2% from a high of $10.44 on December 16, 2020, to $10.11 on December 31, 2020, compared to a peak-to-trough decline of 33.9% for the S&P 500.
• However, the stock fully recovered to its pre-crisis peak by January 13, 2021.

Are you feeling anxious regarding RKLB stock? Consider adopting a portfolio strategy.

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Stocks may experience rapid fluctuations or significant downturns, but long-term success is achieved by remaining invested. An appropriate portfolio can help you benefit from gains and mitigate the impacts of individual stock declines.

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