Rocket Lab USA, Inc. (NASDAQ:RKLB) took a hit on Tuesday, with shares falling 10.76% to $20.07 at 10:35 AM ET after a critical short report from Bleeker Street Research cast doubts on the company's Neutron rocket timeline and financial health.

The report claims Rocket Lab's mid-2025 launch target for Neutron is unrealistic, with industry experts suggesting delays of one to two years. It also raises concerns about engine development, production capacity, and launch infrastructure, warning that these issues could make it harder for Rocket Lab to secure major contracts, like the National Security Space Launch Phase 3 Lane 1 program.

Another red flag? The Neutron rocket's first announced customer, E-Space, is described as an undercapitalized startup, leading to doubts about the stability of the deal. The report also speculates that Neutron launch slots might be selling for less than the company claims, which could hurt Rocket Lab's revenue potential.

On the financial side, Bleeker Street estimates Neutron's development costs at $300-$600 million and questions whether Rocket Lab's $504 million in cash reserves (as of September) will be enough. The report suggests the company may need to raise additional capital to bring Neutron to market.

Without Neutron, the short seller argues, Rocket Lab's valuation is tough to justify, especially as SpaceX continues to dominate the market, putting pressure on Rocket Lab's smaller Electron rocket business.