Rocket Lab's Archimedes Test Halts Six-Day Slide, but Wall Street Eyes Neutron Launch Timeline and Valuation Risks

Rocket Lab fires Archimedes vacuum engine, ending a 6-session losing streak; analyst consensus remains 'Buy' despite valuation concerns and negative margins.

Rocket Lab successfully fired its Archimedes vacuum engine on July 14, a critical milestone for the upcoming Neutron rocket, and the shares responded with a modest 1.88% advance to €70.40 on Wednesday. The gain snapped a brutal six-session losing streak that had wiped 23.6% from the stock, bringing the market capitalization down to roughly €44.4 billion.

The test of the AVac engine — an optimized variant with an extended nozzle designed for space operation — is a key risk-reduction step for Neutron, which remains the centerpiece of Rocket Lab’s long-term growth story. Management now targets first flight for the fourth quarter of 2026, a slight delay from earlier expectations after a setback during tank testing earlier this year. The broader stock market offered little explanation for the sell-off: the S&P 500 edged up 0.4% over the same six-day period, underscoring that the pressure on Rocket Lab was company-specific.

Valuation remains the elephant in the room

Despite a 45.8% revenue surge over the past twelve months — well above the S&P 500 median of 7.5% — the market is increasingly focused on the cost of that expansion. Rocket Lab’s operating margin stands at negative 33.2%, while the index average is a positive 18.4%. The stock trades at 72.2 times trailing sales, a multiple that dwarfs the S&P 500’s median of 3.3 times.

The first-quarter numbers tell the story. Revenue reached $200.3 million, split between Space Systems ($136.7 million, or roughly 68%) and Launch Services ($63.7 million). Backlog hit a record $2.2 billion, and cash and marketable securities totaled $1.48 billion, giving the company access to more than $2 billion in liquidity including credit lines. Yet the bottom line showed a GAAP net loss of $45 million and adjusted EBITDA of negative $11.8 million — a reminder that profitability remains elusive.

Iridium deal adds heft, but also complexity

On June 29, Rocket Lab announced an $8 billion cash-and-stock acquisition of Iridium Communications, a move that instantly adds a profitable satellite network with over 2.55 million subscribers. The transaction is intended to create a more vertically integrated space platform, combining Rocket Lab’s launch and satellite-building capabilities with Iridium’s operational network. The deal has yet to close, and its integration remains a near-term focus alongside Neutron’s progress.

Analysts on Wall Street remain broadly constructive. A consensus of 16 analysts tracked by S&P Global gives Rocket Lab a "Buy" rating, with an average price target of $116.57 — implying roughly 48% upside from the current level. Targets range from $77 to $150. B of A Securities reaffirmed a $115 target and a 49.38% expected gain over twelve months on June 30. Morgan Stanley, in a note on July 8, maintained its "Overweight" rating, pointing to the diversification into Space Systems as a key revenue and order driver.

Technical picture suggests a battered stock

At Wednesday’s close, Rocket Lab’s relative strength index stood at 37.8, approaching the oversold threshold of 30 but still reflecting the gravity of the recent sell-off. The stock now trades about 27% below its 50-day moving average of €94.52, yet sits roughly 2.7% above the 200-day average of €67.26 — a configuration that suggests a rotation out of high-growth, high-multiple names rather than a complete reassessment of the underlying business. Implied volatility remains elevated at 91, in the 71st percentile of its annual range, while the 30-day annualized volatility measures 95.42%.

The next major catalysts — Neutron engine and tank tests, the Iridium transaction’s progress, and ultimately the rocket’s debut flight in late 2026 — will determine whether the stock stabilizes near current levels or tests the 52-week low of €32.60. For now, the Archimedes test has at least interrupted the free fall, but the fundamental questions about valuation and profitability have not been resolved.