TLDR
- Rocket Lab stock crashed 9-11% after hitting an all-time high of $54+ per share
- Company announced plans to raise up to $750 million through stock sales via SEC filing
- The offering replaces a previous $500 million agreement, under which $396.6 million was already sold
- Rocket Lab has $564 million cash on hand but burns nearly $200 million annually
- Stock shows technical bearish signals with RSI at 38.75 approaching oversold territory
Rocket Lab stock took a nosedive Tuesday morning, falling over 10% after the company announced plans to sell up to $750 million worth of shares. The timing couldn’t be more interesting – the stock had just hit an all-time high above $54 per share the night before.
The space company filed with the SEC late Monday, revealing it had entered into a sales agreement to offer shares “from time to time” at market prices. Six major banks, including Bank of America, JMP, and Needham, will help execute the sales.
This new offering replaces a previous agreement from March that allowed Rocket Lab to sell up to $500 million in stock. Under that earlier deal, the company had already raised $396.6 million before announcing this updated arrangement.
The market’s reaction was swift and brutal. Shares opened lower and continued sliding throughout the morning session. By mid-morning, the stock was trading around $47-48, representing a drop of more than 10% from the previous close.
Rocket Lab currently has approximately $564 million in cash and cash equivalents as of June 30. However, the company burns through nearly $200 million annually according to recent financial data.
Capital Needs Drive Timing
The cash raise makes sense when you consider Rocket Lab’s ambitious projects. The company is still developing its larger Neutron rocket, which represents a major step up from its smaller Electron vehicles.
Rocket Lab is also pursuing opportunities in President Trump’s Golden Dome missile defense program. These space initiatives require substantial upfront investment before generating returns.
The company emphasized it’s not obligated to sell any shares under the new agreement. But with stock prices at historic highs, the timing provides maximum value for any potential sales.
Technical Picture Turns Bearish
From a technical standpoint, Rocket Lab shares are showing clear bearish momentum. The RSI reading of 38.75 suggests the stock is approaching oversold conditions, though it hasn’t reached that threshold yet.
Support appears to be forming around the $50 level, which aligns with recent trading lows. Resistance sits at $55, where the stock has struggled to break through consistently.
The MACD indicator shows a bearish crossover, with the MACD line at -0.15 and signal line at -0.10. This technical setup suggests continued downward pressure in the near term.
Despite the selloff, analyst sentiment remains largely positive. Needham maintains a Buy rating with a $55 price target set earlier this month. Cantor Fitzgerald holds an Overweight rating with a $54 target, while KeyBanc also rates the stock Overweight with a $50 target.
Rocket Lab has posted a momentum score of 99.27 according to Benzinga Edge Rankings, indicating strong underlying business trends despite today’s price action.
The company’s stock has been on a remarkable run this year, climbing from lows around $7 to recent highs above $55. That represents a nearly 700% gain for investors who bought at the bottom.
Trading volume spiked to over 650,000 shares by mid-morning, well above the average daily volume of approximately 22.8 million shares.
