Why Redwire Stock Is Rocketing Higher Today

Space technology company Redwire (NYSE: RDW) said its lunar and Martian manufacturing technology has passed a key review, meaning it can be involved in future NASA projects.

Investors are reaching for the stars, sending Redwire shares up as much as 21% at the open Wednesday and up 16% as of 11 a.m. Eastern.

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The pick-and-shovel space stock

If the future does involve humanity setting up shop on the moon and exploring Mars, Redwire hopes to make the infrastructure that makes those endeavors possible. On Wednesday, the company said its Mason tool suite had passed NASA's Critical Design Review test and can now be used in future missions.

Mason tools, designed to operate on the moon and Mars, can be used to build berms, landing pads, and roads.

The approval is part of a $12.9 million NASA award to prototype Mason for moon activities.

"We are proud to have successfully completed this exciting milestone and bring Mason one step closer to launch," Tom Campbell, Redwire's president of space missions, said in a statement. "Leveraging Redwire's unmatched in-space manufacturing experience, Mason technology is critical to enabling sustainable operations on the Moon and Mars surface."

The announcement comes one day after Redwire announced a separate contract to conduct space-based research on a new cancer treatment using the company's in-space laboratory tech.

Is Redwire a buy?

There's every reason to be excited about Redwire. We appear headed toward a new golden age of space exploration, and unlike in the 1960s, private companies, including space stocks like Redwire, are likely to play a leading role.

But there is also ample reason for caution. Redwire reported just $61.4 million in revenue in its most recent quarter, but it's valued by the market at more than $1.3 billion. Much of that valuation is based on potential, but Redwire is going to need a lot to go right, not all of which it can control. Among the potential questions: Will SpaceX and other contractors meet deadlines to build the rockets needed to make repeated visits to the moon possible?

For those excited by the opportunity, it would be wise to make Redwire a small part of a well-diversified portfolio.

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Lou Whiteman 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.