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Key Takeaways

• Rocket Lab shares fell 8.46% on Friday amid thin holiday trading, sparking debate over year-end stock momentum.
• The company’s $816 million Space Force contract may strengthen long-term growth prospects despite short-term pullbacks.
• Rocket Lab ended 2025 with a record 21 successful Electron launches, proving strong operational reliability.
• Wall Street has remained divided on Rocket Lab, with price targets ranging from $61 to $90 reflecting mixed optimism.

Rocket Lab (RKLB) closed Friday at $70.65, down 8.46% from Thursday’s levels, after swinging between $70.39 and $76.99 on unusually low holiday trading volume of 23.16 million shares. Investors attributed the drop largely to profit-taking and thin market liquidity, which tends to exaggerate price swings during post-Christmas sessions.

Analysts noted that Rocket Lab’s volatility has mirrored a broader pullback in space-focused stocks, following a year marked by rapid gains fueled by government contracts and successful launch cadence.
 

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Image Source: KnockoutStocks

Defense Contract Fuels Long-Term Bull Case

Despite the short-term pullback, Rocket Lab’s fundamentals have remained strong. On Dec. 19, 2025, the company announced an $816 million prime contract from the U.S. Space Development Agency (SDA) to produce 18 satellites for the Tracking Layer Tranche 3 program.

This award has positioned Rocket Lab alongside defense and aerospace giants such as Lockheed Martin and Northrop Grumman, with total Tranche 3 orders reaching approximately $3.5 billion.

CEO Sir Peter Beck highlighted that the deal demonstrates Rocket Lab’s ability to compete as a vertically integrated national-security prime contractor, and additional “merchant supplier” opportunities could bring total capture value close to $1 billion.

Record Launches Highlight Execution Reliability

Rocket Lab capped 2025 with operational milestones that continued to impress investors. On Dec. 21, the company completed its 21st Electron launch of the year, marking a new annual record with a 100% mission success rate.

Repeatable launch success is a crucial factor in securing both commercial and government clients, bolstering confidence in Rocket Lab’s ability to convert contracts into revenue.

Analysts and investors alike saw the launch record as tangible proof of execution, especially as the company has continued to prepare for its medium-lift Neutron rocket, with an expected arrival at Launch Complex 3 in early Q1 2026.

Wall Street Divided on Stock Outlook

Analyst sentiment for Rocket Lab has remained mixed. Needham raised its price target to $90, citing the SDA contract and potential follow-on revenue streams, while consensus estimates from TipRanks and MarketBeat averaged between $61 and $68.25.

Some firms, like Cantor Fitzgerald, maintained overweight positions but expressed caution at recent price levels, emphasizing the need for continued operational milestones and revenue growth to justify valuations.

Investors will be closely watching the company’s Q4 2025 earnings report, anticipated in early March 2026, for updated guidance on revenue, margins, and EBITDA performance.

Looking Ahead to Monday Trading

As Rocket Lab looks to enter the new week, investors will face a clear trade-off, short-term volatility versus long-term growth. Key factors to watch include whether the stock can stabilize above post-selloff levels, the delivery of SDA contract milestones, early Neutron launch results, and sector-wide space tech developments.

Even amid Friday’s pullback, Rocket Lab’s narrative remained anchored to tangible outputs and a growing defense-space footprint, which may continue to attract institutional investors seeking exposure to a maturing, high-growth aerospace company.

Rocket Lab’s stock has experienced a sharp end-of-year correction, but the company’s operational achievements and defense contract backlog have continued to support a bullish long-term thesis. Investors will weigh near-term volatility against a strong execution record and strategic growth opportunities as Rocket Lab heads into 2026.

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