This was also the M2-F2's 16th glide flight, scheduled to be the last one before the powered flights began. However, as pilot Bruce Peterson neared the lakebed, the M2-F2 suffered a pilot induced oscillation (PIO). The vehicle rolled from side to side in flight as he tried to bring it under control. Peterson recovered, but then observed a rescue helicopter that seemed to pose a collision threat. Distracted, Peterson drifted in a cross-wind to an unmarked area of the lakebed where it was very difficult to judge the height over the lakebed because of a lack of the guidance the markers provided on the lakebed runway.

Peterson fired the landing rockets to provide additional lift, but he hit the lakebed before the landing gear was fully down and locked. The M2-F2 rolled over six times, coming to rest upside down. Pulled from the vehicle by Jay King and Joseph Huxman, Peterson was rushed to the base hospital, transferred to March Air Force Base and then the UCLA Hospital. He recovered but lost vision in his right eye due to a staph infection.