These 3 Stocks Are Up to 56% Below Their Highs, and Suddenly the Market Is Buying Them

A rocket that has never flown has launches booked worth $515 million. Yet its manufacturer is 56% below its yearly high and rose 26% in a week. Along with it, the market bought up two other battered stocks - one of them posted a profit only on its books.

Three rebounds in one week, three different reasons

Just two weeks ago, Rocket Lab, IonQ, and AppLovin were among the hardest-hit well-known stocks on the U.S. market: all three were roughly half below their yearly highs. Then quarterly results came in, and within a few days each had jumped 15% to 49%. Rocket Lab gained 26% in a week, IonQ 15%, and AppLovin nearly 49%.

At first glance, it's the same story: record revenue, estimates beaten, and huge cash balances. Beneath the surface, though, the market paid for something entirely different in each case. For one, it paid for earnings that actually arrived as cash. For another, it paid for earnings that exist only in the financial statements. And for the third, it paid for orders for a rocket that has never flown.

The deepest decline and the biggest promises belong to the company that just pushed back its most important launch.

Rocket Lab: record revenue, but the rebound rests on a rocket that hasn't flown

From a yearly high of 151 USD, Rocket Lab's stock fell to 66.15 USD, a decline of 56.2%. Yet its third-quarter results look great on paper: the company reported record revenue of 268 million USD (+73% year over year), and its backlog grew 52% in a single quarter to 3.57 billion USD. Demand for launches is so strong that the company raised the price of a Neutron rocket launch from 55 million USD to 70 million USD.

But Neutron, which has 16 missions booked worth more than 515 million USD, has never flown. On the conference call, founder Peter Beck confirmed that the first launch is being pushed back to 2027 after engineers found voids in the dome of the first-stage fuel tank. The quarterly loss of 0.12 USD per share also came in worse than analysts expected, and the stock initially fell in after-hours trading following the results before turning higher.

There's also a second point that gets little attention after the 26% rise. In September, Rocket Lab sold 29.3 million new shares for 1.94 billion USD to finance its acquisition of satellite operator Iridium, which is not expected to close until mid-2027. So much of the 4.6 billion USD in cash on hand is effectively an advance payment for that purchase. Investors are paying 45 dollars for every dollar of annual revenue today, and the Bulios fair value of 31.37 USD is 52.6% below the current price.

"Demand is the result of both a tightening global supply of launch capacity and our customers' confidence that Rocket Lab is the right partner to break through the global constraint on access to orbit."

Peter Beck, Rocket Lab founder and CEO

IonQ: earnings created on paper, and 2 billion dollars in new shares

Of the three companies, IonQ is closest to its low: it fell from a high of 73.65 USD to 34.06 USD (-53.8%) and is still down 32.8% for the year. But its third-quarter results looked like a breakthrough: revenue of 173.8 million USD (+336% year over year), bookings doubled to 1.2 billion USD, and its full-year outlook was raised to 505-515 million USD. It also advanced to the final phase of a DARPA program that could bring in as much as 300 million USD.

But what stands out most is net income of 564 million USD. A company with 174 million USD in revenue reported profit more than three times its total revenue. The explanation is purely accounting-related: it's a non-cash revaluation of warrants, or rights to buy shares, whose value fell along with the share price. That's where the P/E of 71 and net margin of 54% come from. In operations, the company lost 133.6 million USD and burned through 689 million USD in free cash flow over the last 12 months.

Much of the 3.7 billion USD in cash IonQ reports was raised in October, when the company sold shares for 2 billion USD at 40 USD each. Today, the stock is six dollars cheaper. The paradox: the Bulios fair value of 36.22 USD is 6.3% above the current price, so the only one of the three stocks trading roughly "at fair value" is the one whose earnings are the least tangible.

"Our bookings more than doubled to $1.2 billion, even as we converted some of that backlog into record third-quarter revenue."

Inder Singh, IonQ Chief Operating and Financial Officer

AppLovin: the most real cash, the least trust

AppLovin has had the wildest ride of the three this year. It plunged from a high of 738 USD to as low as 225 USD after a fresh wave of short-seller attacks in January and reports of an SEC investigation into data collection. After its November 5 results, the stock jumped 31% in a single day and ended the week up 48.9%. Today it stands at 404.77 USD, still 45.2% below its high.

Here, the rebound is backed by money that actually exists. The company reported revenue of 2.18 billion USD (+55%), net income of 1.44 billion USD (+72%), and earnings per share of 4.30 USD, compared with 2.45 USD a year earlier. It kept 66 cents of net profit from every dollar of revenue, and immediately put its 1.42 billion USD in free cash flow toward 1.4 billion USD in share buybacks. The board also approved an additional 3.6 billion USD in buybacks, and its fourth-quarter outlook is 2.365-2.395 billion USD.

And yet the market trusts this company the least. Its P/E of 24 is a fraction of its five-year average of 273, and the stock is even cheaper than the average software stock today (P/E of 31.6). But the Bulios fair value of 272.65 USD is 32.6% below the share price. In short, the market sees the earnings but doesn't believe they will last. CEO Adam Foroughi himself warned on the call that stronger fourth quarters would be followed by tougher first quarters as e-commerce advertising grows.

"This was only a partial rollout. ... The growth opportunity is real, and we're still very early."

Adam Foroughi, AppLovin CEO and co-founder

What will decide the outcome: three dates and three signals

Rocket Lab first needs to show that Neutron exists beyond its order book. The first signal will be pressure and cryogenic tests of the repaired first-stage tank, along with a new, specific launch date in 2027. The second will come with the February 25, 2027 results: the company has guided to fourth-quarter revenue of 270-290 million USD and a higher gross margin. If Neutron slips again, the 515 million USD in orders will remain just a promise, and the share price will continue to rest on faith.

IonQ faces an easier test: by year-end, it needs to deliver roughly 190 million USD in revenue to meet its own outlook. Adjusted EBITDA and the rate at which it burns cash will tell us a lot; net income alone is not informative here. If the warrants are revalued in the opposite direction again, the accounting profit will turn into a loss. And any further share offering below 40 USD will mean the company is diluting shareholders at a lower price than it did in October.

AppLovin's key date is February 10, 2027, when it will show whether fourth-quarter revenue is growing at the promised rate of 43% to 44% and whether the full rollout of the new generation of models delivers what Foroughi hinted at. If so, a P/E of 24 will look like a market mistake for a company with a 66% net margin. If new reports of an SEC investigation emerge, the January scenario could repeat itself, this time from a higher price.

Three stocks, three rebounds, but only one of them has a weekly jump backed by money that has already landed in the bank. For the other two, the market is still buying the promise that it will arrive next time.