Rocket Lab (NASDAQ: RKLB), a developer of reusable orbital rockets, went public through a merger with a special-purpose acquisition company (SPAC) on Aug. 25, 2021. It started trading at $11.58 per share, and closed at a record high of $150.23 on May 27, 2026.

But as of this writing, it trades at about $80. Let's see what caused that near-50% decline, and what history suggests could happen after its stock finally bottoms out.

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How fast is Rocket Lab growing?

Rocket Lab generates most of its revenue from its Electron orbital rocket, which it has successfully launched 92 times to deploy more than 263 satellites. Its major customers include NASA, the U.S. Space Force, and the Swedish National Space Agency.

The Electron carries smaller payloads than SpaceX's (NASDAQ: SPCX) Falcon rockets, but Rocket Lab plans to launch its higher-capacity Neutron rocket by the end of this year. It also aspires to become an "end-to-end" space services company by expanding its Photon satellite bus platform, which boosts satellites into their intended orbits, and manufacturing more spacecraft, satellites, and subsystems for companies and government agencies.

From 2025 to 2028, analysts expect Rocket Lab's revenue to grow at a 41% CAGR as it launches more rockets and expands into adjacent markets. They also expect its adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) to turn positive in 2027 and more than double in 2028.

Why did Rocket Lab's stock pull back?

But with an enterprise value of $48.6 billion, Rocket Lab's stock already trades at 53 times this year's sales. At its peak, it was valued at $82.3 billion, or 89 times this year's sales. That bubbly valuation set it for a steep pullback after SpaceX's IPO on June 12 sucked all of the oxygen out of the space sector. In addition to pulling capital away from smaller space stocks like Rocket Lab, SpaceX's market debut posed a clear competitive threat to those smaller fish.

Rocket Lab's Electron and Neutron rockets don't directly compete against SpaceX's Falcon rockets. Yet SpaceX's upcoming Starship -- its largest rocket ever -- could curb the demand for smaller payload rockets and reduce its launch prices. That pressure is likely making investors wary of analysts' rosy estimates for Rocket Lab, and fears of higher interest rate hikes are further compressing its valuations. That's why its stock dropped from its record high.