Rocket Lab Corporation (RKLB) experienced a sharp sell-off on Friday, with shares closing at $102.39, down $12.38 or 10.79%, despite the company's imminent addition to the Nasdaq-100 Index. The decline came as the broader space sector took a hit following the highly anticipated public debut of SpaceX, prompting investors to lock in gains.
Rocket Lab is set to join the Nasdaq-100 before the market opens on Monday, June 22, following the index's quarterly rebalancing. The Nasdaq-100 comprises the 100 largest non-financial companies listed on the Nasdaq stock exchange. Inclusion typically triggers mandatory buying from index funds and exchange-traded funds (ETFs) that track the index, which Nasdaq estimates has over $800 billion in assets tied to it.
Despite this milestone, Friday's trading was volatile, with RKLB shares swinging between $99.75 and $125.71 on heavy volume. The sell-off was part of a broader retreat in space-related equities, as investors rotated out of the sector after SpaceX's market entry. Reuters reported that U.S. space stocks fell broadly, with Rocket Lab and Planet Labs both declining approximately 8% during the session. Chris Beauchamp, chief market analyst at IG Group, noted that investors may worry that the hype cannot live up to expectations.
Rocket Lab's CEO, Sir Peter Beck, hailed the Nasdaq-100 inclusion as a landmark moment for the company. The firm has completed over 80 successful launches and deployed more than 250 satellites into orbit. It continues development of the Neutron rocket, a medium-class launch vehicle designed for constellation deployment, with a target launch by the end of the year.
On the financial front, Rocket Lab reported first-quarter revenue of $200.3 million, up 63.5% year-over-year, with a backlog of $2.2 billion. For the second quarter, the company guided revenue between $225 million and $240 million, while forecasting an adjusted EBITDA loss of $20 million to $26 million. Adjusted EBITDA excludes interest, taxes, depreciation, amortization, and one-time items.
However, the company's valuation remains a key concern. With a market capitalization of approximately $66 billion as of the last close and annual revenue of just $600 million in 2025, Rocket Lab's stock is priced for years of rapid growth. The company posted a net loss of $198.2 million last year, underscoring that it is not yet profitable on a GAAP basis.
Investors are now focused on the June 22 index effective date, which could lead to further rebalancing by funds and keep short-term trading choppy. Beyond that, the next major catalyst will be the Neutron rocket's first launch, which Rocket Lab says remains on track for the end of the year, with hardware integration and engine qualification proceeding as planned.
For now, RKLB remains a high-risk play. While the index upgrade and growing backlog support the growth narrative, Friday's sell-off, persistent losses, and stretched valuation leave little room for error. Any delays in Neutron, softer launch demand, margin compression, or a shift in investor preference toward SpaceX and larger space stocks could weigh heavily on the shares.
