Why Rocket Lab's Recent Fall Is Overblown

While the precipitous fall of CoreWeave's stock hogged many headlines this past week, it was an equally rough ride for Rocket Lab (NASDAQ: RKLB) and its investors. Shares of the end-to-end space company fell more than 25% as of Oct. 16. A delay in the company's Neutron rocket launch, combined with Space Exploration Technologies' (NASDAQ: SPCX) momentum, led to the poor performance.

The Neutron rocket is a crucial part of Rocket Lab's plan to move into medium-lift launches and compete with SpaceX for market share. Unfortunately, engineers discovered a small manufacturing defect, which led the company to push back the launch to 2027. This is not the first time the launch has been delayed, and investors are losing their patience.

Sure, SpaceX is a well-funded powerhouse, and the Neutron delay isn't great, but the 25% drop seems largely overblown. Rocket Lab still has a backlog of more than $2.3 billion, and approximately 45% of that will be converted into revenue in the next year.

Additionally, the company's second-quarter revenue popped 62%, and the third quarter looks like it'll stay on that same growth trajectory. This is all happening already without Neutron. Getting Neutron up and running is important, but Rocket Lab has much more to offer through its space systems segment, which includes components, satellites, and spacecraft.

Rocket Lab's price dip is a welcome relief for a stock that was trading at a very high premium. It's still a high-risk investment, but the company's main sources of revenue and backlog are intact and continue to grow. I see this more as an opportunity, and any short-term panicking is very much overblown in my opinion.

Catie Hogan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Rocket Lab. The Motley Fool has a disclosure policy.