Should You Buy Redwire While It's Below $13?
Key Points
Redwire's stock surged to $26 per share amid excitement around space stocks, but has since plunged nearly 58%.
The company provides critical components for space exploration and national security.
Redwire's backlog is now over $500 million and has grown for five consecutive quarters.
- 10 stocks we like better than Redwire ›
Redwire (NYSE: RDW) shares surged earlier this year, reaching as high as $26. The pick-and-shovel space and defense company rode the wave of enthusiasm around space stocks amid the initial public offering of Space Exploration Technologies, aka SpaceX, in June.
Since then, the stock has plunged nearly 58% and is priced below $13 per share. Is now a good time for investors to scoop up shares of Redwire?
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Redwire provides critical components for space and national security
Redwire provides space components and subsystems that enable space exploration and research. With modern warfare expanding into orbit, Redwire is also leaning into defense. Modern deterrence and missile tracking rely on satellites and space imaging, and Redwire manufactures the critical hardware that lets them function.
One example is its Roll-Out Solar Arrays (ROSA), which are 20% lighter and use one-quarter of the storage volume of traditional panels. These have become essential for both defense and space exploration.
Image source: Getty Images.
Maxar contracted Redwire to build two massive 60 kW ROSA wings for NASA's Power and Propulsion Element (PPE), the highest-power roll-out arrays ever manufactured. NASA repurposed this fully integrated PPE bus for its upcoming deep-space flights, and Redwire's hardware will provide electrical power on the 2028 SR-1 Freedom mission to Mars.
Is Redwire stock a buy right now?
Redwire is seeing strong demand growth. Its backlog has multiyear bookings from NASA and the Department of Defense and has surged to over $542 million. This is a 64.5% increase from last year and represents the fifth consecutive quarter of backlog expansion.
Data by YCharts.
That said, the company is expanding and racking up net losses. For example, it has opened a new microgravity facility in Indiana and expanded its Huntsville, Alabama, facility to scale unmanned aircraft systems (UAS) and payload manufacturing.
Redwire has used equity to fund its expansion, including a $500 million at-the-money program to sell stocks from time to time, diluting shareholders in the process. Analysts project net losses in the coming years, making Redwire a risky stock for investors buying today.
Should you buy stock in Redwire right now?
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Courtney Carlsen 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.
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