Cathie Wood buys $31.6M of Rocket Lab stock: is she betting the selloff went too far?

Rocket Lab stock NASDAQ:RKLB is under pressure, Neutron’s inaugural launch window is narrowing and NASA has handed a major Mars communications contract to Blue Origin.

Yet Cathie Wood’s ARK Investment Management is buying.

ARK purchased 504,799 Rocket Lab shares across three ETFs on Tuesday, worth about $31.6 million at the $62.54 closing price.

That followed 200,303 shares bought Monday, taking two-day purchases to 705,102 shares, worth roughly $44 million.

Rocket Lab fell 2.2% Tuesday, its ninth decline in 10 sessions, then slipped further after hours.

Wall Street is cutting targets, not abandoning Rocket Lab

Bank of America analyst Ronald Epstein lowered his Rocket Lab price target to $110 from $115 on August 31 but kept a Buy rating.

TipRanks reported that the cut partly reflected expectations for a higher share count rather than a major deterioration in Epstein’s operating view. At Tuesday’s close, the revised target still implied about 76% upside.

That gives bulls a straightforward argument: even after recent setbacks, one of Wall Street’s freshest targets remains far above the market price.

But a target does not prove the selloff has gone too far. Rocket Lab still has to deliver the growth embedded in those forecasts, and a growing part of that case depends on Neutron.

Neutron is the biggest catalyst and the biggest risk

Rocket Lab wants Neutron to move it beyond small launch and into the larger medium-lift market, but the schedule has become increasingly important.

Chief executive Peter Beck said after second-quarter results that the window for an end-of-year inaugural launch was “narrowing.” Rocket Lab still needs to complete major testing milestones before flight.

Cantor Fitzgerald analyst Andres Sheppard raised his target to $122 from $96 after the results and called Neutron “the most material catalyst,” according to TipRanks.

Sheppard argued that the orbital launch market remains supply-constrained and Rocket Lab is well positioned to benefit through Electron, HASTE and eventually Neutron.

That creates the tension behind Wood’s purchases. If Neutron performs as intended, a stock trading more than 50% below its May record could eventually look discounted.

However, if delays continue, the catalyst supporting some of Wall Street’s highest valuations keeps moving further away.

NASA loss hurts sentiment, but backlog offers support

The latest setback came after Tuesday’s close, when NASA selected Blue Origin to develop its Mars Telecommunications Network.

NASA said the firm-fixed-price contract has a maximum potential value of about $700 million and requires Blue Origin to deliver a Mars telecommunications orbiter by the end of 2028. Rocket Lab had been eligible to compete.

Rocket Lab ended the second quarter with a record $2.36 billion backlog, up 137% from a year earlier.

The company expects about 45.5% of that backlog to be recognised within 12 months and had more than 90 launches booked across Electron, HASTE and Neutron.

Roth Capital analyst Suji Desilva cut his target to $110 from $130 after the quarter but retained a Buy rating. The Fly reported that Desilva said the backlog provides “meaningful near-term revenue coverage.”

That is why Wood’s buying is notable without proving she has called the bottom.

ARK is adding exposure during Rocket Lab’s weakest stretch in months, while analyst targets remain substantially above the share price. But whether the selloff has gone too far now depends increasingly on execution.