Why Redwire Stock Plummeted 50.2% Last Month and Has Kept Falling in July

Redwire (NYSE: RDW) stock got crushed in last month's trading, falling 50.2% across the stretch. Over the same period, the S&P 500 and the Nasdaq Composite fell 1.1% and 2.8%,respectively.

Redwire stock saw huge sell-offs last month after the company announced a major new fundraising move. Its valuation rapidly moved lower amid valuation trends for space stocks connected to the initial public offering (IPO) of Space Exploration Technologies. Defense stocks also generally saw weak trading last month.

Image source: Getty Images.

June was a brutal month for Redwire shareholders

On June 9, Redwire published a press release announcing a new at-the-market stock sale program that will allow the company to raise up to $500 million through sales of its common stock. The fundraising move will have a significant dilutive impact for shareholders. With newly created shares entering the market, each existing share comes to represent a smaller piece of the overall whole. The upside is that it will provide the company with substantial operating capital, but investors may have viewed it as a sign that the company viewed its stock as richly valued in addition to dilution-related concerns.

SpaceX's IPO also had a substantial negative impact on Redwire stock. Space stocks have generally been hot over the last year, and the months leading up to SpaceX's IPO on June 12 saw many players in the industry post huge valuation gains -- but that trend reversed last month. While some investors may have been worried that SpaceX finally hitting the market would take some of the hype and excitement away from stocks in the category, others sold positions in other space stocks in order to fund their positions in SpaceX after it went public.

While the stock got crushed in June, there was actually some good news from the company. On June 4, the company announced that it had won a contract with biotech specialist Astrobiome Space to grow strawberries on the International Space Station and test Astriobiome's soil enhancement product. On June 30, the company announced that it had won a contract with Taiwan Color Optics to provide its Penguin Mk2.5 vertical-take-off-and-landing (VTOL) craft to the Taiwanese Coast Guard.

Here's why Redwire is still falling in July

Coming on the heels of last month's precipitous valuation decline, Redwire stock has continued to fall in July. As of this writing, the stock is down roughly 7.5% in the month's trading.

While there hasn't been any fresh bad news for the company, some space-tech stocks have continued to lose ground. With the S&P 500 down roughly 0.2% in the month so far and the Nasdaq Composite down roughly 1.5%, there's also been some broader movement out of speculative growth stocks. Redwire's big sell-offs don't mean that the stock won't be able to recover, but investors clearly aren't thrilled with the at-the-market stock program and the company's perceived near-term return potential compared to other space stocks.

Keith Noonan 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.