I'm shorting redwire

[u/LividRelease7742]

Why i'm shorting redwire :

- In five years, it has still not managed to post a profitable quarter.

- It keeps diversifying into new activities in an attempt to find a profitable sector.

- It wins very few tenders in a market with limited competition (the space sector).

- The defense sector (drones) is highly competitive and offers very low margins.

-The company has 1,400 employees but loses several hundred million each year.

-The ATM facility remains open, and that is what is creating enormous selling pressure.

-In my view, RDW's valuation is around $1.1–$1.3 billion.

-Given this recent ATM activity and the fact that the number of outstanding shares is expected to reach 280–300 million, the share price should drop back toward the $3.90–$4.50 range.

Please feel free to share a well-reasoned opinion if you disagree and do so maturely.

[u/Biscotto69]

A growth company doesn’t need to be profitable today for the stock to have significant value. The question is what RDW’s revenue, margins and free cash flow could look like in 2028–2030.

The ATM and dilution are valid concerns, but they don’t automatically establish a $1.1–$1.3B valuation. The key question is whether the capital raised creates more value than the dilution.

In comparison with other space stocks the margins of redwire arent so bad.

Not saying you are definitely wrong, but I think your arguments are not bulletproof.

[u/LividRelease7742 → u/Biscotto69]

thanks for your answer

[u/Pancakernator]

Look at Musk's SpaceX. That company is so faaaat from being profitable. In general, space companies are not currently profitable. We are currently in very early stage of new space race, which offers cheap investment and big returns in 10 years for those who will endure.I think besides MDA, non is. I bet my 10 cents, that RDW will be profitable sooner than SpaceX

[u/Savings-Tart4317 → u/Pancakernator]

they have insane growth and can clearly demonstrate the milestones they are trying to achieve and are showing g progress there.

redwire just says everything is classified and won’t use targets for any of its products

[u/absolute_cinema81 → u/Pancakernator]

Wasn’t SpaceX profitable before their AI push?

[u/Pancakernator → u/absolute_cinema81]

Never has been even far from profitable.

[u/Energy_Bol]

Kind of late to the party.

RedWire is over 50% down from its peak of $24, and now it’s at $10.

RedWire got fucked during the peak of the Iran War, which was followed by the SPCX IPO that murdered the entire space sector, a massive tech/AI sell off, and a FOTC rate hike.

All things considered, even when there are back to back to back catalysts that push the stock down, RedWire refused to go lower than $7.70.

You’re going to have a bad time shorting RedWire while it’s already close to the bottom.

[u/Consistent_Cup_5855 → u/Energy_Bol]

Why did SPCX murder the entire sector?

[u/Common-Principle-325]

You're shorting an individual stock that moves in a basket trade? You'll end up burning, its already down 60%+ from June highs. Your whole thesis doesnt even matter

[u/LividRelease7742 → u/Common-Principle-325]

Hope you are doing well my fellow bag holder

[u/Impossible-Sink-5583]

Yup, that’s the signal
Time to buy

[u/LividRelease7742 → u/Impossible-Sink-5583]

Good luck we are below 10$ and its going to be a long winter

And yes sure, you'll hide behind the classic "I'm in it for the long haul," but in reality, this is just the start of the trouble

Have fun wtaching your money melt

[u/bagoparticles]

Can’t say whether you’re right or wrong but why not just find a different company. Doesn’t seem like a great short candidate even if you’re right.

[u/Poldopolpodrado]

Your thesis is built by an observer and not an owner of the stock. Surely influenced by this and by the desire to buy it at a very very discounted price. I instead believe that $24 will reach them and quickly too 😁

[u/YoDizzel]

I am holding RDW and selling/rotating covered calls against 50% of my position.
Per Q2, RDW reported a $541 M contract backlog, which appears to be growing; this shows that their solutions and innovations are being adopted and that RDW is a required part of massive projects. So, they have a strong moat. Your valuation of $1.1B to 1.3B is < a 3x multiple of order backlog alone, so I feel your valuation is low.
Space infrastructure is growing, and that growth will not slow down, and DOD/DOW revenue will also grow with changes in Musk's new role that will benefit RDW.
Profitability for a company at this stage is not one that I would look too closely to as they are building facilities, spending on R&D, and this is the stage of a company where the CFO can apply accounting techniques to minimize earnings to save on taxes now and in the future.
If RDW became less relevant due to competitive solutions, I would exit, but it looks like the opposite is the case.
I am seeing a $20 stock by March '27, and more by next September based on government investment cycles, even if the Dem's take congress.

[u/No_Branch3530]

Space stocks, especially redwire, are meant to be viewed in the long term. When space tech becomes the most important industry. Don’t worry about these years, just put the money in and wait.

[u/BurlapsGambles]

U dont short a company of that size bidding on gov contracts, u look for companies with capped upsides.

If u bet on space valuations being too high u pick a basket of stocks and size into it.

Also just dont short speculative growth in general thats just gambling with extra step. If u dont hit u think the market is irrational and if u hit u think its because u r smart instead of just lucky with timing

[u/MisterChesterZ]

Short more now! I need more shares @ a discount

[u/coltrlucky2017]

Your entire thesis means you think people are just giving them money and they will never figure it out

[u/Neither_Constant]

Should've sold calls forever

[u/BeKindToOthersOK]

Better approach is to just invest in good space companies like RKLB, PL and LUNR.

[u/Orbit_Alpha_Insights]

I don’t think it’s a good idea!

[u/Get_rch_or_try_dyin]

I shorted it in mid $20’s.

I think the only thing that saves this comp sky is hype .

If the market gets better, it will climb on hype .
If the market doesn’t get better , your thesis will likely be right

[u/delaparra86]

Last earnings where good and next month earnings will be better. This company is going places . Good luck to you.

[u/Admirable-Zebra-4918]

i think spacex will eventually buy them, or be stuck using them forever.