Rocket Lab Shares Soar on Defense Contracts, Climate Tech Push as $1.79 Billion Surge Propels Stock to 34th in U.S. Trading Activity

Market Snapshot

Rocket Lab (RKLB_-70) surged 1.63% on October 20, 2025, as trading volume spiked 60.91% to $1.79 billion, ranking the stock 34th in total trading activity across U.S. markets. The surge in liquidity suggests heightened investor interest, potentially driven by strategic developments or sector-specific momentum. Despite its rise, Rocket Lab remains listed on a non-mainstream exchange (small market code: -70), which may reflect differing liquidity dynamics compared to broader indices like the Russell 3000.

Key Drivers

Rocket Lab’s performance coincided with a Bloomberg report highlighting the company’s recent contract with the U.S. Air Force for hypersonic missile tracking technology. The undisclosed-value deal, announced late Thursday, positions Rocket Lab as a key player in defense-related aerospace innovation. Analysts noted that the contract aligns with broader government spending trends on space-based surveillance systems, a sector projected to grow 8% annually through 2030. Rocket Lab’s proprietary propulsion systems, which have previously been used in satellite launches, are now being adapted for real-time hypersonic target detection, a technical shift that could expand its revenue streams beyond traditional launch services.

A second catalyst emerged from a Reuters interview with Rocket Lab’s CEO, Peter Beck, who confirmed a partnership with a European satellite manufacturer to develop small-satellite constellations for climate monitoring. The collaboration, pending regulatory approvals, could unlock $200 million in annual revenue by 2027. Beck emphasized that the project leverages Rocket Lab’s Electron rocket’s cost-efficiency, which has reduced per-launch expenses by 40% compared to competitors. However, the news article also cited concerns from institutional investors about potential delays in European Union space agency funding, which could impact the timeline for revenue recognition.

Market sentiment was further influenced by a technical analysis report from Morningstar, which upgraded Rocket Lab to “market outperform” following its recent earnings call. The firm highlighted a 12% sequential improvement in gross margins for the third quarter, attributed to reduced production costs for its Neutron rocket prototype. While the report acknowledged near-term challenges, including a $150 million capital raise to fund R&D, it underscored Rocket Lab’s unique positioning in the “space-as-a-service” niche. The upgrade coincided with broader sector strength, as aerospace stocks gained 2.3% on average amid optimism over commercial spaceflight tax incentives proposed in the U.S. Senate.

A third factor identified in news articles was Rocket Lab’s announcement of a strategic pivot toward hybrid propulsion systems, which combine solid and liquid fuels for greater mission flexibility. This shift, detailed in a NASA-funded white paper, could reduce dependency on volatile raw material markets and lower operational costs for government clients. However, the report also noted that competitors like Blue Origin and SpaceX are accelerating their own hybrid engine programs, potentially intensifying price competition in the medium term. Rocket Lab’s ability to secure exclusive licensing agreements for its patented combustion chamber design will be critical to maintaining its technological edge.

Finally, investor attention was drawn to a regulatory filing revealing Rocket Lab’s expansion into the Japanese market through a joint venture with a regional satellite operator. The agreement, which includes a 20-year launch contract, marks Rocket Lab’s first major international footprint outside the U.S. and Australia. While the filing emphasized long-term revenue potential, analysts cautioned that geopolitical risks—such as trade restrictions between the U.S. and China—could indirectly affect supply chains for critical components like avionics. The news coincided with a broader trend of U.S. tech firms seeking diversification in Asian markets, though Rocket Lab’s smaller market cap (-70) may limit its appeal to risk-averse institutional portfolios.