Rocket Lab Completes Neutron Engine Tests and Lands $190M Pentagon Contract, But Stock Remains Under Pressure

Rocket Lab shares edge up 0.68% after 37% monthly drop; oversold RSI at 30.2. Operational wins: AVac engine test, $190M DoD contract, but Iridium deal and insider selling temper sentiment.

Rocket Lab’s shares ended the week at €59.30, up 0.68% on Friday — a tentative sign of stabilization after a brutal stretch that saw the stock shed 16.48% in the past five trading sessions and 36.85% over the last 30 days. The sell-off, which has driven the relative strength index to 30.2 — deep in oversold territory — reflects a collision of sector-wide jitters and company-specific anxieties, most notably the planned $8 billion acquisition of Iridium Communications.

Yet behind the chart damage, the company has quietly assembled one of its strongest operational weeks. On July 17, Rocket Lab conducted a full hot-fire test of the AVac engine, the vacuum-optimized version of the Archimedes powerplant that will drive the second stage of the Neutron rocket. The test came on the heels of a successful Archimedes qualification test at NASA’s Stennis Space Center. Eight Archimedes engines will produce 1.5 million pounds of thrust on Neutron’s first stage, while the AVac variant delivers 1.2 times that thrust in the upper stage. The rocket also features a novel "Hungry Hippo" fairing system designed to simplify payload integration.

Neutron’s development has not been without setbacks — a fuel tank on the main stage ruptured during a pressure test — but Rocket Lab continues to target a first flight in the fourth quarter of 2026. The company is simultaneously expanding its launch infrastructure at Wallops, Virginia, including ground systems and mission control, to support a higher cadence of commercial and national security missions.

The government pipeline is swelling. The US Department of Defense awarded Rocket Lab a $190 million contract for 20 flights of the HASTE suborbital vehicle, which has maintained a 100% success rate. That award adds to a backlog now exceeding 70 launches valued at roughly $2 billion. Meanwhile, the US Space Force raised the ceiling on the National Security Space Launch Phase 3 Lane 1 program by $11.4 billion to a cumulative $17 billion, a pot that Rocket Lab can tap alongside ULA, SpaceX, Stoke Space, Impulse Space, and Relativity Space. The company also executed the Victus-Haze mission for the Space Force in a record 16 hours and 42 minutes from go-ahead, a contract worth $32 million.

But for all the operational momentum, investors remain fixated on the Iridium transaction. The all-cash deal, valued at approximately $8 billion, would give Rocket Lab a global satellite network and recurring revenue stream, but retail shareholders have raised concerns over potential dilution and execution risk. The stock has also been weighed down by insider selling: over three months, insiders disposed of 3.85 million shares worth $362.8 million.

Wall Street is split. Piper Sandler initiated coverage in mid-July with a neutral rating and an $83 price target, well below the broader consensus of around $110. Morgan Stanley, however, reiterated an overweight rating with a €105 target, viewing Rocket Lab as a budding vertically integrated space platform on the model of SpaceX. Chief executive Sir Peter Beck has downplayed the competitive threat, noting that of the more than 100 launch startups that have emerged, only Rocket Lab and SpaceX have established regular flight operations — a pair he describes as "friendly rivals."

With the stock trading roughly 12% below its 200-day moving average of €67.33, technicians are eyeing the €59 level as a potential floor. The next catalyst is likely to be the quarterly earnings report, where investors will look for clarity on Iridium integration plans and updates on Neutron production at the Wallops facility. For the first quarter, Rocket Lab reported revenue of $200.35 million — up 63% year-over-year — and a per-share loss of $0.07, slightly better than expected. Whether that story can lift the stock may depend on how quickly the company can bridge the gap between technical milestones and market sentiment.