Redwire Stock Has Fallen Over 40% -- Here Is What Investors Need to Know

Even though it's still up on the year, the last month has been rough for Redwire (NYSE: RDW). As of June 23, the Redwire stock price has sunk by over 40% due to a mix of company-specific news and external factors.

The aerospace and defense company still has plenty of hurdles to clear before shareholders should expect a rebound. But the good news is one of the issues it's facing isn't a fundamental business flaw, and that issue should be short-lived.

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Share dilution and worries around cash burn

On June 9, news broke that Redwire was selling up to $500 million worth of stock through at-the-market offerings. The company's share price was punished on the day, falling by more than 7%.

The reason was the worry over the dilutive nature of new stock being issued. But if the money raised is used productively and adds value to the company, it can help boost the stock price over the long term. If it turns out to be mostly used to fund short-term needs, however, that won't help the stock price recover.

There's also ongoing concern that the company keeps burning through cash and may need to keep raising capital, creating further dilution. For 2025, it reported a net loss of more than $226 million and ended the year with total liquidity of about $130 million.

The boost for the entire space industry

With all the excitement around the Space Exploration Technologies initial public offering (IPO), it provided more attention to the rest of the space sector. That attention helped broadly boost stock prices across the space sector for a bit, but after the SpaceX IPO, the excitement quickly wore off.

Since SpaceX went public, the Redwire stock price has dropped nearly 14% from June 12 to June 22. That has weighed on the stock price more recently, but it's also not a fundamental business issue, which is good news for shareholders.

The space sector just needs some time to adjust after so much attention and retail investment dollars were directed to SpaceX.

What's next

Despite the challenges, Redwire has promise. It expects revenue to jump from roughly $335 million in 2025 to $450 million-$500 million in 2026, and in its 2026 first-quarter earnings results, it reported a record backlog of nearly $500 million.

That said, for Redwire stock to regain its footing and reverse the losses from the last month, it needs a solid 2026 second-quarter earnings report. It needs to show it can stand on its own feet beyond the hype SpaceX brought to the space sector, get spending under control, and turn more of its backlog into revenue.

Jack Delaney 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.