Rocket Lab shares fell approximately 20% in the two weeks following the SpaceX IPO, dropping from over US$100 to around US$80. According to investment specialist Greg Smith, this decline reflects a shift in investor capital toward SpaceX, as market participants reassess growth prospects and relative valuations within the space sector.
Why did Rocket Lab’s share price decline?
The recent pullback follows a period of intense growth for Rocket Lab. The company’s stock reached a peak of more than US$140 in May. Since then, it has dropped nearly 50% from that high point. Greg Smith notes that Rocket Lab shares were already showing signs of weakness before the SpaceX listing occurred.
Smith suggests that the SpaceX IPO triggered a period of portfolio reshuffling. When a highly anticipated company enters the market, investors often move money to reassess where they want their capital. In this case, capital is rotating toward SpaceX.
Rupert Carlyon adds that the decline is largely driven by sentiment. Before SpaceX went public, Rocket Lab was the only way for investors to gain exposure to the space industry. Carlyon states that the share price has fallen 43% over recent months due to this shift in market perception.
Despite the recent price drop, Rocket Lab saw a massive run-up over the last two years, with early investors seeing returns of roughly 15-fold.
How do Rocket Lab and SpaceX compare in valuation?
Investors are currently weighing the relative value of both companies. According to Rupert Carlyon, Rocket Lab’s valuation has cooled significantly from its peak. At its highest point, Rocket Lab was trading at over 100 times sales. It is currently trading at approximately 50 times sales.
In comparison, SpaceX is currently valued at 59 times sales. This comparison shows why some capital has migrated toward SpaceX. The following table highlights the shift in Rocket Lab’s valuation metrics:
| Metric | Rocket Lab (Peak) | Rocket Lab (Current) | SpaceX (Current) |
|---|---|---|---|
| Sales Multiple | >100x | ~50x | 59x |
What is driving investor activity in New Zealand?
New Zealand investors have shown significant interest in the SpaceX IPO. Data from BlackBull Markets indicates that Kiwi traders were among the most active participants globally during the first week of the SpaceX listing. Michael Walker, managing director, said the IPO was one of the biggest market moments of the year for New Zealand.
Trading patterns for SpaceX have fluctuated since the listing. On the first day of trading, 99% of trades received by BlackBull Markets were long positions. By the second day, the sentiment shifted, with 74% of trades being short positions. However, Walker reports that trading flows have since stabilized, with approximately 75% of trades returning to long positions.
High-growth sectors like space technology often experience “rotation,” where investors move from smaller, high-multiple companies to established industry leaders during market shifts.
What is the future outlook for Rocket Lab?
Rocket Lab continues to secure fundamental business wins despite the stock volatility. The company recently secured a new contract with NASA for three scientific launches. This contract provides a clear indicator of continued demand for their launch services.
Some investors have expressed concern over share dilution. Rupert Carlyon noted that Rocket Lab has issued 82 million shares over the last two years, representing 16% of the total market capitalization. Carlyon stated that such issuance is not uncommon for high-growth start-ups and is not the primary driver of recent price movements.
Frequently Asked Questions
Why is Rocket Lab’s share price falling?
According to Greg Smith and Rupert Carlyon, the fall is largely due to investors shifting capital toward SpaceX and a general reassessment of Rocket Lab’s high valuation.
Has Rocket Lab secured new business recently?
Yes. Rocket Lab has signed a new contract with NASA to conduct three scientific launches.
Are New Zealand investors trading SpaceX?
Yes. Michael Walker of BlackBull Markets reports that New Zealand traders were among the most active globally during the SpaceX IPO.
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