Leadership Sell-Off Clouds Rocket Lab’s Operational Success

A stark contradiction defines the current situation at Rocket Lab USA. The aerospace firm is achieving one operational milestone after another, yet its share price has been in a persistent downward spiral. This raises a critical question for investors: why is there such a profound loss of confidence in the market when the company's launch record has never been better?

The divergence between business performance and stock market valuation is striking. Rocket Lab posted a flawless operational record for 2025, executing 18 successful Electron launches without a single failure. Financially, the company reported a substantial 48% year-over-year revenue surge in the third quarter.

Its technical prowess was recently showcased by managing two launches from different hemispheres within a mere 48-hour window. International growth continues, underscored by a freshly secured contract with the Japanese Aerospace Exploration Agency (JAXA) for dedicated missions. Despite these achievements, the market has largely dismissed them. Over the past month, the equity has plummeted more than 30%, falling far from its peak levels reached in October.

Key Operational Achievements:
* A perfect 18-for-18 launch record in 2025.
* A new partnership agreement with JAXA.
* Third-quarter revenue growth of 48%.
* The successful completion of multiple NASA missions.

Should investors sell immediately? Or is it worth buying Rocket Lab USA?

The Weight of Insider Transactions

The primary source of the negative sentiment appears not in space, but within the company's own executive suites. A wave of insider selling has placed heavy downward pressure on the stock. Over the last 90 days, corporate leaders have disposed of shares worth approximately $274 million.

This group of sellers includes high-profile names such as Chief Executive Officer Peter Beck and Chief Financial Officer Adam Spice. When a company's top management engages in sales of this magnitude, investors frequently interpret it as a cautionary sign, regardless of concurrent operational successes. This sustained selling activity has significantly eroded confidence in the stock's near-term prospects.

A Valuation Under Scrutiny

Beyond the insider sales, Rocket Lab's fundamental valuation is a growing concern for many market participants. The company currently trades at a price-to-sales (P/S) multiple exceeding 40. This stands in sharp contrast to the broader aerospace and defense industry average, which sits at just 3.1.

Justifying such a substantial premium remains challenging while the company continues to report losses. Free cash flow remains deeply negative at -$220 million. Market hopes are now pinned on the development of the new, larger Neutron rocket and the company's target of reaching profitability by 2029. Until then, the stock is likely to remain volatile, caught between its demonstrable technical excellence and a demanding valuation that leaves little room for error.