Rocket Lab (NASDAQ: RKLB) has been one of the most punished names in the market over the past two months.
After peaking near $151 in May, the stock collapsed toward the mid-$60s, a drawdown of more than 50% from its 52-week high, wiping out the entire year's gains and then some.
For a company that spent the first half of 2026 as a market darling and leader in the space sector, the reversal has been brutal.
And yet, one uncomfortable question keeps surfacing even after a decline this steep: is Rocket Lab still too expensive?
Piper Sandler Says the Valuation Is the Problem
The most pointed version of that concern came from Piper Sandler. On July 15, Piper Sandler initiated coverage on Rocket Lab with a Neutral rating and an $83 price target, and the reasoning was explicit. Even after a near-50% sell off from its highs, the firm argued, the stock remains fairly expensive relative to the complex profile of vertically integrated space companies.
The call sent shares down more than 11% in a single session and gave voice to what a lot of investors may have been quietly thinking. Rocket Lab remains one of the most compelling long-term stories in the space sector, but a great business does not automatically make a great stock at any price.
The numbers may help explain some of the caution. Rocket Lab trades at roughly 66 times trailing sales, an extraordinary multiple for any company, let alone one that is not yet consistently profitable. The company generated $601.8 million in trailing revenue in fiscal year 2025, but posted a net loss of $198 million, with net margins of negative 27%.
For a stock to command a valuation like that, the market has to price in years of flawless execution and enormous future growth. And when sentiment shifts, as it has across the entire space sector since SpaceX's (NASDAQ: SPCX) IPO, it's those types of stocks that fall the hardest.
The Bull Case Has Not Disappeared
That said, the fundamental momentum behind Rocket Lab remains genuinely impressive, which is why this makes for an interesting debate rather than a dismissal. The business is firing on all cylinders operationally. First-quarter revenue climbed 63% from a year earlier to a record $200.35 million, and the contracted backlog reached a record $2.2 billion.
The recent news flow has been relentless, too. Just this week, Rocket Lab secured a $266 million U.S. Air Force contract and was named one of seven companies eligible for a Space Force launch program carrying a $17 billion ceiling. The pending $8 billion acquisition of Iridium would help transform the company into a vertically integrated space operator with a recurring services revenue stream. However, it also introduces dilution concerns that have weighed on the stock.
Then there is Neutron. The company's medium-lift rocket remains on track for its debut later this year. As CEO Peter Beck has emphasized, the Neutron timeline is the single most important variable for the long-term thesis. A successful debut would open an entirely new and far larger revenue opportunity than Electron has ever addressed.
A Balanced View
So where does that leave investors? Rocket Lab is executing brilliantly and building one of the most complete franchises in commercial space. At the same time, it remains priced for perfection, which is precisely the vulnerability Piper Sandler flagged.
The stock's TradeSmith Health Indicator has been in the Yellow Zone for two weeks, and insider selling, including sales from CEO Peter Beck, has added to the near-term caution.
Encouragingly, the broader analyst community remains more constructive than Piper Sandler. The consensus rating across 22 analysts is Moderate Buy, with an average price target of $110.18 that implies close to 60% upside. Even the Street-low target of $60 sits only modestly below where the stock trades today.
Attention now turns to Q2 earnings on August 6. That report, plus any fresh detail on the Neutron timeline and the Iridium deal, should help clarify whether this correction was an overdue reset or the opening of a more durable entry point. For long-term believers, a 55% discount might certainly be tempting. But Piper Sandler's warning still deserves to be heard: even now, this is not a cheap stock.
The article "Rocket Lab Has Corrected Nearly 50%. Is It Still Too Expensive?" first appeared on MarketBeat.
