What Happened?
Shares of aerospace and defense company Redwire (NYSE: RDW) fell 18.4% in the morning session after the company reported third-quarter financial results that missed analyst estimates and lowered its full-year revenue forecast.
Redwire announced a GAAP loss of $0.29 per share, wider than the consensus estimate for a loss of $0.15. While revenue grew 50.7% year-over-year to $103.4 million, the figure still fell short of Wall Street's expectation of $132 million. Compounding the negative sentiment, the company significantly reduced its full-year revenue guidance to $330 million at the midpoint, a steep drop from the previous forecast of $500 million. Profitability also deteriorated sharply, with the operating margin worsening to negative 40.5% from negative 10.8% in the same quarter last year, signaling rising costs.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy Redwire? Access our full analysis report here.
What Is The Market Telling Us
Redwire’s shares are extremely volatile and have had 96 moves greater than 5% over the last year. But moves this big are rare even for Redwire and indicate this news significantly impacted the market’s perception of the business.
The previous big move we wrote about was 2 days ago when the stock dropped 3.9% on the news that markets became increasingly wary of high valuations following a significant AI-driven rally.
The tech-heavy Nasdaq fell approximately 1.4% as a wave of caution swept through the market. A key example of this trend is Palantir Technologies, which saw its shares drop around 7% despite reporting record quarterly results that surpassed analyst estimates and raising its full-year revenue outlook. This seemingly contradictory movement highlighted a broader sentiment shift. Investors appeared to be engaging in profit-taking, concerned that the recent surge in AI-related stocks had led to stretched valuations. This broader market caution affected high-growth technology companies that had previously surged on AI optimism but faced increased scrutiny, signaling a potential cooling-off period for the sector.
Adding serious weight to this caution, leadership at both Goldman Sachs and Morgan Stanley highlighted the possibility of a correction in the equity markets over the next couple of years. Despite the euphoria driven by AI optimism and the promise of future rate cuts, these banks viewed this cooling-off period not as a disaster, but as a necessary and healthy feature of a long-term bull market.
Redwire is down 63.1% since the beginning of the year, and at $6.30 per share, it is trading 75.5% below its 52-week high of $25.66 from February 2025. Investors who bought $1,000 worth of Redwire’s shares at the IPO in January 2021 would now be looking at an investment worth $604.71.
Do you want to know what moves the business you care about? Add them to your StockStory watchlist and every time a stock significantly moves, we provide you with a timely explanation straight to your inbox. It’s free for active Edge members and will only take you a second.
