Despite Positive Developments, Rocket Lab Stock Is a High-Risk Name

Rocket Lab (RKLB) continues to make impressive strides in its dealings with the federal government, most recently becoming well-positioned to obtain a new, major deal from the U.S. Space Force. On May 7, the company also reported strong first-quarter results.

Still, some factors combine to make RKLB stock risky and unappealing at this point. These factors include its extremely high valuation, technical issues the company has experienced with a medium-sized rocket in development, and recent stock sales from members of management.

Let's take a closer look.

About Rocket Lab Stock

Based in Long Beach, California, Rocket Lab develops various products focused on space travel and space-based initiatives, including launch vehicles, components, and satellite buses. RKLB stock has a price-to-sales (P/S) ratio of 137.9 times and a market capitalization of $70.8 billion.

Shares have surged 77% so far in 2026 and climbed 365% in the past 52 weeks. However, RKLB stock is facing some near-term declines, with shares down almost 14% over the past five days.

Rocket Lab Receives Good News From Washington, Posts Solid Q1 Results

On May 27, Rocket Lab announced that it had passed a Space Development Agency (SDA) review related to its Tracking Layer Tranche 3 constellation. As a result, Rocket Lab is getting close to providing “satellites equipped with advanced missile warning, tracking, and defense capabilities to U.S. and allied national security." Given the large amount of funding that President Donald Trump's administration is looking to spend on missile defense, this latest development could help Rocket Lab a great deal.

Recently, the firm also disclosed that it has obtained a $90 million deal to provide two satellites to the U.S. Space Force. Back in March, Rocket Lab announced that it had obtained a $190 million contract to provide “20 hypersonic test flights with its HASTE launch vehicle” for the U.S. Department of Defense as well.

In Q1 2026, revenue jumped almost 64% year-over-year (YOY) to $200 million. Meanwhile, Rocket Lab's non-GAAP operating loss dropped to $18.98 million from $35.81 million in the prior-year period. Additionally, the firm's backlog climbed 20% sequentially to a record $2.2 billion.

Rocket Lab Still Faces Problems

Still, Rocket Lab has some factors working against it. For example, the debut of the Neutron — Rocket Lab's medium-sized rocket that is a key potential catalyst in the medium-to-long-term — has been delayed yet again. Specifically, in late February, the company disclosed that Neutron's first launch would not take place until “at least” Q4 2026. Originally, the rocket was slated to take off by the end of 2025, then later postponed to mid-2026. With a ruptured main stage tank causing the latest timeline push, the repeated delays could indicate that Neutron faces some serious technical issues.

Adding to my concerns, Rocket Lab's CFO Adam Spice has unloaded large amounts of RKLB stock this year. On May 12, Rocket Lab director Alexander Slusky also sold 100,000 shares of RKLB stock.

Finally, after a recent surge, Rocket Lab has a huge P/S ratio of 137.9 times. That raises questions about the valuation of the company.

All told, investors considering shares of RKLB may be best off looking elsewhere for now.