Rocket Lab USA (NASDAQ: RKLB) has long been a standout among space-focused stocks within the aerospace and defense sector. Over the past year, RKLB shares have soared more than 500%, fueled by renewed investor interest in space innovation and national defense contracts. Most recently, the stock came within striking distance, about $1 per share, of its all-time high.
However, following a failed breakout and a quick pullback, some investors might wonder: Is this a warning sign, or just a healthy pause in a longer-term uptrend?
Failed Breakout or Healthy Consolidation?
RKLB’s most recent rally was sparked in part by a very public feud between Elon Musk and President Donald Trump, which raised questions about the future of SpaceX’s government contracts. Amid concerns that SpaceX could lose valuable NASA or Department of Defense business, attention quickly shifted to Rocket Lab as a potential beneficiary.
The stock surged more than 6% in after-hours trading immediately following the feud, with investors pricing in the possibility of new federal opportunities.
But the rally was short-lived. Musk soon dialed it back, easing political tensions and calming investor fears. Most recently, Musk posted on X that he regretted some of the comments that he made toward President Trump.
As tensions ease and the two powerful men appear to be finding a resolution, RKLB has given back those gains and is now trading around the same levels seen before the drama unfolded.
Technically, the stock’s push above the key $30 level turned out to be a false breakout. The day after hitting near-record levels, RKLB dropped over 8%, creating a bearish reversal pattern that often signals short-term weakness.
Still, the technical setup may not be as fragile as it seems.
Technical Perspective: Innocent Until Proven Guilty
Despite the failed breakout, RKLB remains above all major moving averages and is still firmly in an uptrend. The recent high near $31 was rejected, but the stock continues to hold above key short-term support at $25, its most recent higher low and a level that now acts as critical technical support.
If shares can consolidate in the $27 to $30 range over the coming days or weeks, a retest of $30 and potentially new all-time highs will likely be back on the table.
It’s essential to note that failed breakouts don’t always result in sustained downtrends, especially when a stock maintains key support levels and exhibits signs of consolidation rather than capitulation.
[content-module:TradingView|NASDAQ: RKLB]Strong Fundamentals Support the Bullish Thesis
Beyond the charts, Rocket Lab has several strong fundamental tailwinds that make a compelling case for long-term growth. Most notably, the company recently announced its plan to acquire Geost, a significant move toward becoming a vertically integrated defense and space contractor. Analysts at Stifel have praised the deal, noting it broadens Rocket Lab’s reach and strengthens its position in the high-demand defense segment.
The most significant catalyst on the horizon is the Neutron rocket. Slated for its maiden launch in the second half of the year, Neutron represents a game-changer for Rocket Lab. With a reusable design and a payload capacity of up to 13,000 kg, Neutron significantly increases the company’s competitiveness in the swiftly growing satellite launch market.
It also positions Rocket Lab to bid for high-value government contracts, including the National Security Space Launch (NSSL) Phase 3 Lane 1 contracts, which could be worth up to $5.6 billion.
Neutron’s development, combined with Rocket Lab’s push into vertical integration, underscores a long-term strategy aimed at capturing market share from industry giants like SpaceX. These fundamentals suggest that even after a technical stumble near all-time highs, the long-term trajectory for RKLB remains strong.
Broader Trends Still Point to Strength For RKLB
While Rocket Lab’s failed breakout above $30 may concern some, the broader technical and fundamental picture still points to strength. As long as the stock holds above $25 and consolidates above key support levels, another leg higher remains a realistic possibility in the short to medium term. Especially with Neutron on deck and new defense opportunities opening up.
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