Rocket Lab’s Neutron Rocket Hits Development Snag, Weighing on Shares

The beginning of the 2026 trading year has delivered a mixed performance for Rocket Lab USA shareholders. While the company's core operations continue to demonstrate reliability, a significant setback in its next-generation rocket program is casting a shadow over its future growth narrative and pressuring its stock.

Attention is fixed on the company's ambitious Neutron rocket, a larger vehicle considered crucial for its long-term expansion. The development program recently encountered a technical issue: during a hydrostatic pressure test, the first-stage tank ruptured.

Company management has emphasized that such failures are not uncommon in tests designed to push components to their physical limits, and noted that the test facilities themselves were undamaged. However, this incident inevitably introduces uncertainty into an already aggressive development timeline. The market is now keenly awaiting clarity on whether this represents a minor hurdle or a more substantial delay for Neutron's commercial debut.

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

Operational Business Delivers as Usual

In contrast to the development challenges, Rocket Lab's established launch business remains on solid footing. The company successfully deployed two satellites for customer Open Cosmos into a circular orbit using its workhorse Electron rocket. This mission marked the 80th overall launch for the aerospace firm, underscoring the technical maturity and operational stability of its current revenue-generating model.

Investor Sentiment Turns Cautious

The financial markets have responded to this juxtaposition of steady operations and future uncertainty with pronounced caution. Despite the successful Electron mission, Rocket Lab's equity traded lower in pre-market activity. Investor focus is squarely on the Neutron program's progress.

Following a substantial rally of 178% over the preceding twelve months, the stock has shown sensitivity to any potential delays. A weekly decline of more than 8% reflects this heightened investor nervousness. The upcoming earnings call in February will place management under pressure to provide a clear assessment of the test failure's impact on the Neutron schedule.