Rocket Lab's Neutron rocket suffers 'rupture' during testing

Last month, Rocket Lab (RKLB) said it had cleared a "significant milestone" that puts its Neutron rocket on target for a launch in 2026.

According to the company, its reusable payload fairing, dubbed the "Hungry Hippo," had successfully completed qualification testing and was being sent to Rocket Lab’s Launch Complex 3 at the Mid-Atlantic Regional Spaceport in Virginia.

Rocket Lab said in a press release at the time that the design, structure and operations for its fairing halves are all now qualified for flight.

“A rocket like Neutron has never been built before, and we’re doing it at a pace and price point that’s going to bring the innovation and competition needed in today’s industry,” Shaun D’Mello, Rocket Lab’s vice president for Neutron, said in a statement.

However, Rocket Lab last week provided a less encouraging update on Neutron, indicating that the rocket had suffered "a rupture during a hydrostatic pressure trial" in overnight testing.

The company said that it "pushes Neutron to the limits and beyond to qualify its systems and structures for launch" and the rupture happened during testing for the Stage 1 tank.

"Testing failures are not uncommon during qualification testing," Rocket Lab said in a statement. "We intentionally test structures to their limits to validate structural integrity and safety margins to ensure the robust requirements for a successful launch can be comfortably met."

RKLB shares fell 5.5% in early morning trading on Thursday, following the announcement.

There has been growing anticipation on Wall Street for the launch of Neutron because it is seen as putting Rocket Lab in competition with Space X's Falcon 9, while further bolstering the company's share of the burgeoning space economy market.

Rocket Lab has thus far built its name on its Electron launcher, which plays a significant role in the payload sector.

The company noted that there "was no significant damage to the test structure or facilities" and said that the next Stage 1 tank is already in production.

"Neutron’s development campaign continues while the team assesses today’s test outcome," it said.

But Rocket Lab appeared to keep open the possibility that the launch of Neutron could be delayed.

"The team is reviewing the Stage 1 test data, which will determine the extent of the impact to Neutron’s launch schedule," the company said.

A short report written by Bleeker Street Research last year accused Rocket Lab of overpromising on its Neutron rocket, suggesting that the California-based company had "materially misled investors" with its launch timeline.

The company had initially scheduled the launch for the middle of 2025 and then pushed it to the end of the year before delaying it until 2026. It has not yet set a firm timeline on when it expects the launch to happen this year.

Rocket Lab CEO Peter Beck said during the company's earnings call in August that the launch would only happen by the end of 2025 if it reached every milestone needed to launch the mission.

"We’re not going to rush and take stupid risks," he said.