After 50% Drop, Is It Still Too Expensive?

After peaking at $151 in May, the stock slumped to the mid-$60s, down more than 50% from its 52-week high, erasing gains for the year and more.

For a company that spent the first half of 2026 as the market darling and leader in the space industry, the transition has been brutal.

And yet, one uncomfortable question keeps coming up even after the steep decline: is Rocket Lab still too expensive?

Piper Sandler Says Trouble Is Trouble

A more pointed version of that concern came from Piper Sandler. On July 15, Piper Sandler started coverage on Rocket Lab with an average rating and a price target of $83, and the reasoning was clear. Even after selling off nearly 50% from its peak, the company argued, the stock remains overpriced compared to the complex profile of vertically integrated aerospace companies.

The call sent shares down more than 11% in a single session and gave voice to what many investors may have been quietly thinking. Rocket Lab remains one of the most compelling long-term stories in the space sector, but a good business does not automatically make a good stock at any price.

Numbers can help explain some of the warnings. Rocket Lab trades at around 66 times trailing, a rare multiple for any company, let alone one that has yet to be consistently profitable. The company generated $601.8 million in sequential revenue for fiscal year 2025, but posted a net loss of $198 million, and a net margin of 27%.

The Bull’s Case Hasn’t Disappeared

That said, Rocket Lab’s core motivation remains truly impressive, which is why this makes for an interesting debate rather than dismissal. The business is firing on all cylinders with performance. First-quarter revenue rose 63% from a year ago to a record $200.35 million, while contract backlog hit a record $2.2 billion.

The recent news flow has been relentless, too. Just this week, Rocket Lab received a $266 million US Air Force contract and was named one of seven companies eligible for the Space Force’s $17 billion launch program. The pending $8 billion purchase of Iridium could help transform the company into a vertical utility with an emerging revenue stream. However, it also presents the concern of reducing the weight of the stock.

Then there’s Neutron. The company’s medium-lift rocket is still on its way to launch this year. As CEO Peter Beck emphasized, Neutron’s timeline is the single most important variable in the long-term thesis. A successful debut will open up an entirely new and far greater revenue opportunity than Electron has ever experienced.

A Balanced View

So where does that leave investors? Rocket Lab is very efficient and has built one of the most complete franchises in the trading space. At the same time, it always comes at the price of perfection, which is exactly the risk that Piper Sandler flagged.

The stock’s TradeSmith Health Indicator has been in the Yellow Zone for two weeks, and insider selling, including selling from CEO Peter Beck, has added to the near-term warning.

Encouragingly, the wider critic community remains more constructive than Piper Sandler. The consensus rating across 22 analysts is Moderate Buy, with an average price target of $110.18 suggesting a close to 60% upside. Even the Street-low target of $60 sits only modestly below where the stock is trading today.

Attention now turns to Q2 earnings on August 6. That report, along with any new timeline details for Neutron and the Iridium deal, should help determine whether this correction was an overdue reset or the opening of a longer-lasting entry point. For long-time believers, the 55% discount may be tempting. But Piper Sandler’s warning is still worth heeding: even now, this is not a cheap stock.

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