Small Danish Space Company’s Stock Skyrockets on EU Spending Plans

Zero gravity doesn’t have to mean zero gains. As investors piled into EU companies deemed remotely defense-related, shares of Danish Aerospace — which sells exercise equipment for astronauts, along with other onboard equipment — shot up more than 400% in the past month and about 250% this week.

Though the small space company said its defense contracts account for only a smidge of its sales, it went supersonic after EU leaders floated measures that could boost defense spending by hundreds of billions of euros.

This Ain’t a Scene

It’s a rearmament race. Germany’s likely-next chancellor, Friedrich Merz, on Tuesday proposed a plan that could juice the country’s defense and infrastructure spending by hundreds of billions of euros. Merz plans to exempt defense spending greater than 1% of Germany’s GDP from the country’s “debt brake” (a self-imposed borrowing limit), which would be a major economic reform.

Earlier the same day, the European Commission announced a “Rearm Europe” initiative that it said could mobilize €800 billion in defense spending (first priority: provide aid to Ukraine). And last week, the UK said it’ll increase its defense budget faster than planned:

• Together, the announcements signal a shift in EU policy that would make defense spending a top priority, boosting the stocks of a slew of EU companies.
• Companies that have surged the most include Germany’s top arms manufacturer, Rheinmetall; Swedish aerospace and defense company Saab; Danish satellite maker GomSpace; and Norwegian defense-systems supplier Kongsberg Gruppen.

Meanwhile, US defense stocks have been temperamental as investors remain uncertain about the country’s spending plans. After Defense Secretary Pete Hegseth told WaPo the US will slash its defense budget last week, Palantir, which has several contracts with the Department of Defense to supply AI tech, had its worst day since May.

Defense-related stocks were up and down this week after Trump announced plans to withdraw aid from Ukraine, signaling the US could spend less on future conflicts. 

Balancing Act: The US’s annual defense budget rings in at nearly $1 trillion, while the entire EU spent about a third of that last year. But that ratio could shift as Trump looks to cull government spending overall and his “America First” policies pull spending from abroad — leaving the EU to bulk up its budget in case the US won’t back it up in future wars. Investors simply want to be where the money goes.