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Rocket Lab Corporation (Nasdaq: RKLB) shares tumbled on Thursday, January 22, 2026, closing down 5.39% at $83.08 after the aerospace company disclosed a significant setback in its Neutron rocket development program. The stock had opened at $86.38 and traded as low as $81.35 during the session, with volume reaching 9.24 million shares against an average of 23.13 million.

The decline came after Rocket Lab announced that its Neutron rocket’s Stage 1 tank ruptured during a hydrostatic pressure trial, raising concerns about potential delays to the launch schedule for this medium-lift vehicle that represents a critical component of the company’s growth strategy.

Neutron Testing Setback: What Happened and What It Means

On January 21, 2026, Rocket Lab disclosed that qualification testing of the Neutron rocket’s Stage 1 tank resulted in a rupture during a hydrostatic pressure trial conducted overnight. The company was quick to contextualize the failure, stating that testing setbacks are not uncommon during qualification processes where structures are intentionally pushed to their limits to validate structural integrity and safety margins. Rocket Lab emphasized that this rigorous testing approach ensures the robust requirements for successful launches can be comfortably met.

The company provided reassurance that there was no significant damage to the test structure or facilities, and notably, the next Stage 1 tank is already in production. Neutron’s development campaign continues while the engineering team reviews the test data to determine the extent of impact to the launch schedule. Rocket Lab plans to provide a comprehensive update on the Neutron timeline during its Q4 2025 earnings call scheduled for February, leaving investors in a temporary state of uncertainty about potential delays.

BTIG analyst Andre Madrid weighed in on the development, maintaining a Neutral rating while noting the firm expects Neutron to complete one test launch and one paid launch in 2026, followed by four paid launches in 2027, seven in 2028, and nine in 2029. However, Madrid cautioned that depending on investigation results, initial launches could be pushed to the right, adding to investor concerns about timeline slippage for this crucial program.

RKLB Stock Dips Despite Strong Longer-Term Momentum

As of 10:22 AM EST on January 22, 2026, RKLB stock was trading at $83.08, down $4.74 or 5.39% from the previous close of $87.82. The stock has experienced significant volatility, with a 52-week range spanning from $14.71 to $99.58, reflecting both the company’s impressive growth trajectory and the inherent risks in the aerospace sector. Despite Thursday’s decline, Rocket Lab shares have delivered extraordinary returns, up 18.70% year-to-date, 179.56% over the past year, and an astounding 1,632.33% over three years.

The company’s market capitalization stands at $44.23 billion, with analyst price targets ranging from a low of $55 to a high of $120, and an average target of $83.96, essentially in line with the current trading price. With a beta of 2.17, RKLB exhibits high volatility relative to the broader market. The stock trades at a price-to-sales ratio of 81.22, reflecting investor expectations for substantial future growth, though the company remains unprofitable with an EPS of -$0.38 and negative free cash flow of -$111.28 million.

On a positive note, Rocket Lab announced its first successful launch of 2026 on the same day as the Neutron setback. The mission “The Cosmos Will See You Now” lifted off from Launch Complex 1 in Mahia, New Zealand, successfully deploying two satellites into a 1,050 km circular Earth orbit for new customer Open Cosmos. This higher-altitude deployment showcased Electron’s versatility and maintained the rocket’s reputation as the world’s most frequently launched orbital small rocket, providing some reassurance about the company’s core business operations even as Neutron development faces scrutiny.

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