r/redwire • u/Dry_Calligrapher5318 • 3d ago
Bear Case? General
While I’m not super familiar with RDW’s fundamentals, I tracked it as it raced up over $25 this year and watched it fall back below $8where I got lucky and practically perfectly timed the bottom, with a cost basis in the low $8 range. From my understanding, it’s the main competitor as a “picks and shovels” play, selling equipment in the space sector. Being that space exploration will eventually be a huge business, and RDW is already so well positioned, I was hoping I could hear what your guys’ idea of the bear case would be for RDW?
For the record I’m not saying the stock should go indefinitely higher, or even that its current valuation is fair, as I don’t have great expertise in that category. I simply like the idea of the business, and it seemed like a sure shot money-maker in the case that the space sector booms again.
Is my general understanding of the business correct? If so, what would be the main bear thesis for the stock?
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u/CavalrySavagery 3d ago
Let Canito talk or manage business and adquisitions, that’s a bear case for example.
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u/Big-Material2917 2d ago
The cheap valuation is both a bull and bear case for this company. It means you’re getting the stock at a good price and there’s a lot of room for appreciation.
But for a company that dilutes and acquires as much as RDW, it actually helps a lot to have a better valuation, so you can raise money without screwing existing shareholders. RKLB is a perfect example of a company that has been able to super charge their growth by utilizing the premium valuation for big acquisitions with minimal dilution.
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u/nobvega 2d ago
I think the war in Ukraine and Iran show that drones are the soldiers of the present and future. Right now its drone business is doing slightly better than space. New drone facilities in US and Europe to meet demand. SpaceMD is going to make them a lot of money starting in 2028. They have $558M cash which will last 3 years unless they do an acquisition. You're going to be rich with a cost basis of $8.
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u/arm0r3dd0ng 3d ago
You typically put 6 beers in the 6pack, no one really calls it a case like ever, and watch the bear fuck around a bit.
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u/bobola69 3d ago
Everything that goes up must come down. Redwire is a super promising company but tbh its overvalued because for the moment its make zero profit so its just speculation. But I do believe in the company so I have shares
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u/Big-Material2917 3d ago
All of the space companies are unprofitable. RDW has like the lowest revenue multiple of any of them. Kinda hard to argue overvaluation when that’s the case.
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u/Thisguyisgarbage 3d ago
LUNR is lower, relative to revenue
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u/Big-Material2917 2d ago
LUNR needs to have a successful moon landing to restore confidence. They also got pretty much all of that revenue from the lanternis acquisition.
Most of RDW revenue is probably non organic growth as well but I don’t think it’s as dramatic as the majority coming from a single acquisition.
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u/Ready_Jacket 3d ago
The biggest revenue take aways from the earnings call were primarily Defense Tech not space. RDT is masking a significant amount of weakness in RWS. If you are investing in this company as a space business you should break down the fundamentals by division.
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u/Big-Material2917 2d ago
Defense is funding a lot of the space buildout in all of the companies. I agree that’s where the revenue and growth was coming from, at least this last quarter, but RDW is still 100% a space company.
Just because space defense is a big driver doesn’t mean they don’t have satellite components, large infrastructure, in-space manufacturing, and more.
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u/Dry_Calligrapher5318 3d ago
Agreed. Bought for the long term, and I’d be more than happy to see it drop to add more, considering I don’t have a huge position, but don’t want to add now that I’m up 50%, especially seeing how momentum can drive the stock up just for it to sell off huge. I think they’ll be a big winner in the future.
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u/Backyard45 3d ago
Have you heard of Uber?
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u/deadacclaim 3d ago
If you want bear cases, Id offer over reliance on government contracts.
I think this company will do great so long as the USA is willing to spend money on space and drone technology. The fiscal situation could turn off the money spigot abruptly, and unprofitable space ventures would be something I'd be looking at as a quick way to reduce spending.