Why Rocket Lab Stock Is Sinking Today

After explosive gains yesterday, Rocket Lab (NASDAQ: RKLB) stock is coming down to Earth a bit in Thursday's trading. The company's share price was down 5.3% as of 2:45 p.m. ET.

Following the big earnings-driven rally for Rocket Lab yesterday, Cathie Wood's Ark Invest firm has moved to take some profits on the stock. The high-profile investor isn't the only one selling shares after yesterday's huge gains, and the uptick in selling action is pushing the stock lower today.

Cathie Wood and others take profits after Rocket Lab's blockbuster quarter

Ark Invest and its CEO, Cathie Wood, have been among the most vocal champions for Rocket Lab stock, and the confidence paid off with explosive gains for the company's share price yesterday. Rocket Lab stock closed out yesterday's trading up 28% and had been up as much as 53% earlier in the daily session thanks to stronger-than-anticipated Q3 results.

Rocket Lab posted a loss of $0.10 per share on sales of $104.8 million in the third quarter, beating the average Wall Street target's call for a per-share loss of $0.11 on sales of roughly $106.4 million. Revenue was up nearly 55% year over year in the period, and the company also issued strong forward guidance. For the current quarter, the company is guiding for sales between $125 million and $135 million -- good for sequential quarterly growth of roughly 24% at the midpoint of the guidance range.

On the heels of the gains, Ark Invest sold roughly 479,600 shares of the stock across its Ark Autonomous Technology & Robotics ETF and Ark Space Exploration & Innovation ETF. Altogether Wood's sold nearly $9 million worth of the company's stock, and many other investors are also moving to take profits on the stock today.

What comes next for Rocket Lab stock?

While Wood and other investors have been selling Rocket Lab shares, the stock received a new round of bullish coverage from analysts today. Cantor Fitzgerald kept a buy rating on the stock and raised its one-year price target on the stock from $7 per share to $24 per share, citing the company's contract for the use of its reusable Neutron rocket with a commercial satellite company. Meanwhile, Bank of America raised its one-year price target on Rocket Lab from $10 per share to $30 per share and pointed to adoption for the Neutron rocket as a sign the stock was becoming less risky.

Overall, Rocket Lab is still a high-risk, high-reward investment, but the company is clearly making some encouraging progress.

Should you invest $1,000 in Rocket Lab USA right now?

Before you buy stock in Rocket Lab USA, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Rocket Lab USA wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $896,358!*

Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than quadrupled the return of S&P 500 since 2002*.

See the 10 stocks »

*Stock Advisor returns as of November 11, 2024

Bank of America is an advertising partner of Motley Fool Money. Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Bank of America. The Motley Fool recommends Rocket Lab USA. The Motley Fool has a disclosure policy.