Why Did Redwire Stock Crash Today?

Key Points

• Redwire has had generally good news to report so far this week, though the details are a little sparse.

• The company is winning contracts but remains still a few years from profitability.

• 10 stocks we like better than Redwire ›

Shares of Redwire Corporation (NYSE: RDW), a builder of orbital space infrastructure, took a tremendous hit on Wednesday morning, falling 11.9% through 9:55 a.m. ET -- all apparently on no news.

Or at least on no bad news.

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Image source: Redwire.

Redwire's good news week

To the contrary, two days ago, Redwire announced it will partner with industrial giant Honeywell (NASDAQ: HON) "to explore opportunities to mature and expand the use of quantum key distribution technology for civil and defense customers."

(That's right folks, more than just a space stock, Redwire now says it's a quantum computing stock, too.)

Then, just yesterday, Redwire announced a second partnership, this time with European aerospace giant Thales-Alenia, to become the prime contractor on the European Space Agency's Skimsat, a technology demonstration mission launching a small satellite into very low earth orbit (VLEO). Redwire will offer up its own Phantom spacecraft to serve as a guinea pig for the project.

Is Redwire stock a sell?

As you might expect, Redwire stock has been gradually rising all week long as the good PR announcements rolled in. Why it's taken a sudden nosedive today -- on no news -- is harder to explain.

But I can try.

Neither of Redwire's PR releases, after all, mentioned what revenue might be produced the company. Neither gave any indication that the new partnerships will materially move Redwire closer to profitability. To the contrary, most analysts polled by S&P Global Market Intelligence think it will be 2027 before Redwire has any hope of beginning to earn profits for its shareholders.

That's not necessarily a reason to rush out and sell Redwire stock right now. But it's also not a great basis for buying the stock.

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Rich Smith has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.