Why Redwire Corporation Stock Popped Then Dropped
Key Points
Redwire stock jumped on confirmation of the SpaceX IPO date over the weekend.
Now investors may worry that SpaceX IPO buying will cause Redwire stock selling.
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SpaceX IPO excitement is reaching a fever pitch, and driving space stock prices higher this morning -- with or in the case of Redwire Corporation (NYSE: RDW), without any other news.
Shares of Redwire, a specialist in building space infrastructure such as spacecraft docking systems, solar panels, and satellite antennas, jumped more than 12% out of the gate before reversing and giving back all its gains. As of 9:45 a.m. ET, Redwire shares are down 0.5%.
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SpaceX IPO: Good news and bad news for space stocks
Why so much volatility for Redwire? I've got a few theories about that.
Start with the IPO news: Over the weekend, Reuters reported that SpaceX has moved up its IPO date. The company will begin its "roadshow" marketing the IPO to investors on June 4, then price the IPO on June 11, and trading will therefore begin the next day.
That's the SpaceX IPO date then: June 12.
Is the SpaceX IPO good news or bad news for Redwire?
This means investors have less than a month remaining before the SpaceX IPO. Less than a month to trade space stocks amid the excitement surrounding the IPO. Less than a month for Redwire stock, which is up 62% in the past two weeks, to keep rocketing.
In other words, this momentum stock may be about to run out of gas.
The worst news for Redwire is that once SpaceX does an IPO, it's going to suck all the oxygen out of the airlock. Investors who are excited about SpaceX will finally be able to buy SpaceX, and not have to invest in other space stocks as second-class substitutes for the biggest space company on Earth.
When that happens, I expect other space stocks to fall. In fact, this may even be happening today.
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Rich Smith has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Redwire. The Motley Fool has a disclosure policy.
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