Why Redwire Stock Imploded Today

Key Points

• Redwire missed earnings badly last night, reporting a $1.41-per-share GAAP loss.

• Redwire missed on sales as well, reporting only $61.8 million.

• Redwire guided investors to expect a sales miss for the full year 2025, and kept mum on earnings.

• 10 stocks we like better than Redwire ›

Redwire (NYSE: RDW), the space stock specializing in orbital infrastructure, got destroyed Thursday morning after the company reported much worse earnings than investors had expected. Analysts had forecast the company would lose $0.42 per share on sales of $82.8 million -- already not a great result. But Redwire reported last night that second-quarter sales were actually only $61.8 million, and its loss was $1.41 per share.

Redwire stock is down 29% through 10:10 a.m. ET already.

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Image source: Getty Images.

Redwire's Q2 earnings

Redwire led off its report with a list of its non-financial accomplishments in the quarter:

• Closing its acquisition of Edge Autonomy and cementing its new roles as a drone company and a defense company -- in addition to being first and foremost a space company.
• Getting its Stalker drone approved for purchase by the U.S. Army.
• Completing various technical milestones for NASA on an array of projects.

Investors are more concerned with the fact that despite doing all the above, Redwire's sales slowed dramatically, with revenue down 21% year over year and a huge net loss. The company also reported worsening free cash flow, burning $93.5 million in the quarter.

Is Redwire stock a sell?

The bad news didn't end there. Management forecast that sales through the end of this year will range from $385 million to $445 million, including new revenue streams from Edge Autonomy. At the midpoint ($415 million), that's worse than the $430 million in revenue Wall Street had been predicting.

As regards profits, Redwire didn't tell investors it would be profitable or free-cash-flow-positive according to generally accepted accounting principles (GAAP). In fact, it withdrew the adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) guidance it had already given, suggesting there could be even more bad news to come.

Now, Redwire stock is in free fall -- and probably rightly so.

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Rich Smith 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.