Rocket Lab pushed its larger rocket's first flight into next year after the close Wednesday. Because its stock is below the floor of a collar in its pending Iridium deal, every dollar Rocket Lab loses now costs Iridium holders 40 cents.
Rocket Lab's bigger rocket will not fly this year, and the bill does not land on Rocket Lab's shareholders alone.
At 4:40 p.m. Wednesday, Rocket Lab said Neutron's first launch "is now expected to occur in 2027." The company had previously targeted the fourth quarter of 2026 and in August had narrowed that goal to getting the vehicle to the launch pad by year-end. A filing gave no financial estimate of the delay's cost. In a video, Chief Executive Peter Beck said the problem was tiny air pockets inside a carbon-composite dome, with a replacement to be finished and inspected before year-end and tank tests to follow in the first quarter of 2027, after which a firmer date would be set.
Two separate declines
The stock fell twice on Wednesday, for different reasons. During regular trading, before the announcement, Rocket Lab dropped 7.85% to $59.18 as listed space companies sold off together: AST SpaceMobile fell 10.5%, BlackSky 10.5%, Intuitive Machines 9.5%, Firefly 7.2% and Planet Labs 6.8%. That decline matched the group and predates the news.
The second leg came after the release. Shares traded as low as $52.98 after hours and were indicated near $53.30 early Thursday, about 10% below the close. At roughly 598 million shares, that move is worth about $3.5 billion of market value.
The Iridium link
Rocket Lab agreed in June to buy Iridium for $27.00 in cash plus Rocket Lab stock, with a collar on the stock portion. When Rocket Lab trades at or below $67.50, Iridium holders receive a fixed 0.4000 Rocket Lab shares. Rocket Lab first closed below that level in July and has closed below it in every session since Oct. 12.
Below the floor, the arithmetic is simple. At Wednesday's close, the consideration for each Iridium share would have been worth about $50.67. At Thursday's early indication of $53.30, about $48.32. Both compare with the $54.00 headline value in June. Iridium closed Wednesday at $45.78, before the delay was announced.
The final value is set by a 10-day average price measured just before closing, expected in mid-2027, so current prices show exposure rather than outcome. Iridium shareholders approved the deal on Sept. 24 with 99.6% of votes cast in favor.
The debate
One view is that the slip was telegraphed in August, the cause has been identified, and Rocket Lab's near-term value rests on its Electron launches, space systems and a cash-generating Iridium business that reported $495 million of Operational EBITDA, a non-GAAP measure, in 2025.
The other is that this is another Neutron delay for a stock already down about 42% since the day after the Iridium deal was announced, with part of the cost passing straight to Iridium's owners.
What to watch
Thursday's first regular session for both stocks, filings in the Federal Communications Commission license-transfer proceeding, the replacement dome and first-quarter tank tests, and Rocket Lab's third-quarter results.