Key Points
The company is absorbing an acquisition and had some contract delays.
A high-risk stock, Redwire looks like a promising technology developer with a lot of upside.
10 stocks we like better than Redwire ›
Shares of Redwire (NYSE: RDW) collapsed over 30% this week, according to data from S&P Global Market Intelligence. The space and defense technology company had a drop in revenue last quarter and is posting large net losses. It is working on promising new technologies in satellites, drone surveillance, and even biotechnology solutions in space.
As of 3:34 p.m. ET on Friday, Redwire stock was down 35.1%. Here’s why the high-risk company sank this week.
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Delayed contract plans, new acquisition
On Aug. 6, Redwire released its earnings for the second quarter of 2025. Revenue was $61.8 million, down from $78.1 million in the same quarter a year ago. Profits were also elusive, with the company posting a net loss of $78.9 million, larger than its revenue in the quarter. While this is one of the first revenue drops for Redwire in many quarters, selling space and defense solutions to the U.S. government can sometimes be a lumpy business. Redwire said contracts were delayed to later in 2025 and into 2026 for projects such as the Golden Dome, which will have a huge budget from the United States.
On a positive note, Redwire was awarded over $90 million in contracts last quarter and has a pipeline of potential revenue at a staggering level of over $11 billion. As the company dives into cutting-edge technologies such as satellites and military surveillance drones, it will aim to win more and more contracts from the United States military and its allies. It is also looking into on biotech research and drug development in space with its new subsidiary, as well as working on missions to the moon and Mars.
The net loss figure for Redwire looks ugly, but some of that can be explained away as one-time occurrences. There were major one-time expenses in the quarter in relation to its acquisition of drone maker Edge Autonomy, as well as changes to contract estimates. Over time, most of these expenses should go away as the company completes contracts. It had a book-to-bill ratio of 1.47 in the period, meaning that the company had more orders placed than it fulfilled as its backlog ramps up.
Image source: Getty Images.
Should you buy or sell Redwire stock?
Investing in new space and defense technology companies is tough. Many remain private such as Anduril or SpaceX, while Palantir Technologies trades at a premium valuation.
Redwire is unprofitable at the moment, but with a market cap of just $1.3 billion chasing technologies the U.S. government plans to spend tens of billions (if not hundreds of billions) on in the near future, it has a potentially bright future ahead of it. It remains a risky stock, but one investors may want to take a small position in if they want to get exposure to cutting-edge space and defense technology development.
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Brett Schafer has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Palantir Technologies. The Motley Fool has a disclosure policy.
