Rocket Lab shares plunge on another delay

Rocket Lab Corp. shares plunged after the company again delayed the debut of its more powerful Neutron rocket, pushing the vehicle’s first flight to 2027.

The delay, the latest of several for Neutron, comes after the company identified a new issue with how the rocket’s propellant tanks are manufactured in the lead-up to launch.

“I’ve also said that we won’t rush to the pad with unnecessary risk, and that development programs like Neutron have their challenges,” Rocket Lab Chief Executive Peter Beck said in a video explaining the new delay. “Recently, we hit one of those challenges that has moved Neutron’s first launch into next year.”

After a tumble on Thursday, Rocket Lab shares are down more than 25% so far this year.

The company had been aiming to launch Neutron for the first time before the end of 2026. But Rocket Lab hinted in August that it would be challenging to see the rocket fly this year.

Rocket Lab’s primary operational rocket is Electron, which is designed to launch relatively small satellites to orbit. Neutron is meant to be a much more capable vehicle, designed to lift heavier payloads and compete more directly with SpaceX’s dominant Falcon 9 rocket.

Neutron has already faced numerous delays throughout its development. When Rocket Lab first announced the vehicle in 2021, the company planned to launch Neutron for the first time in 2024. But the timeframe for launch has been repeatedly pushed back, first to 2025 and then to this year.

But 2026 has been a tough year for Neutron development. In January, a Neutron propellant tank ruptured during a test, which Rocket Lab said was caused by a defect introduced by a third-party manufacturer.

Afterward, the company pivoted to a new manufacturing process and made some design changes, but that introduced a new issue that caused air pockets to form in the domes of the tanks.

Beck noted that the company was able to replicate the issue and added new steps to the manufacturing process to prevent the air pockets from forming. However, the time it took to identify the problem and introduce a fix pushed the launch back to next year.

Some analysts remained optimistic after the news of the delay, especially given the issue was not traced to a flaw inherent in the rocket’s design.

“In our view, the most important takeaway from the update is that Rocket Lab appears to have identified both the root cause and the solution,” according to a note from Stifel Financial Corp.

Neutron’s fresh delay comes as the space industry is staring down a launch bottleneck in the years ahead. SpaceX has indicated that it plans to sunset its prolific Falcon 9 rocket as it transitions to its new Starship vehicle. Other comparable U.S. alternatives to the Falcon 9, such as Blue Origin’s New Glenn rocket and United Launch Alliance’s Vulcan rocket, are temporarily grounded and slow to ramp up.

“The delay in Neutron’s flight highlights that merchant access to launch for medium-lift payloads remains tight in the near term,” according to a report by Jefferies.

Grush writes for Bloomberg.