Redwire's 30% Plunge: Earnings Shock or Strategic Rebound?

Summary
• Redwire (RDW) slumps 29.85% intraday, trading at $9.61 vs. $13.70 previous close
• Q2 earnings miss: $1.41/share GAAP loss, $61.8M revenue vs. $82.8M estimate
• U.S. Army Stalker drone contract awarded to Edge Autonomy
• Free cash flow burn hits $93.5M, full-year revenue guidance cut to $385–$445M

Redwire’s stock has imploded on Thursday, August 7, 2025, amid a catastrophic earnings miss and deteriorating financials. Despite securing a critical U.S. Army contract for its Stalker drone, the company’s revenue and profit outlook have shattered investor confidence. The stock’s intraday range of $9.405–$11.35 underscores extreme volatility, with technical indicators and options activity pointing to a bearish near-term bias.

Earnings Disappointment Overshadows Strategic Wins
Redwire’s 30% collapse stems from a Q2 earnings report that far undershot expectations. The company reported a $1.41/share GAAP loss and $61.8M in revenue, missing estimates by 25% and 24%, respectively. Worse, management withdrew adjusted EBITDA guidance and slashed full-year revenue forecasts to $385–$445M, a $45M–$85M miss against Wall Street’s $430M target. While the U.S. Army contract for Edge Autonomy’s Stalker drone is a strategic win, investors are fixated on the company’s $93.5M free cash flow burn and lack of profitability. The stock’s collapse reflects a loss of faith in Redwire’s ability to monetize its defense and space infrastructure ambitions.

Aerospace & Defense Sector Mixed Amid Geopolitical Shifts
The broader aerospace and defense sector remains fragmented, with Lockheed Martin (LMT) down 1.16% and Boeing (BA) facing strike risks. While Redwire’s U.S. Army contract aligns with defense sector tailwinds, its earnings collapse contrasts with peers like BAE Systems (BAE) and Raytheon (RTX), which raised profit guidance. The sector’s focus on geopolitical tensions—such as Ukraine’s drone warfare and U.S. military modernization—has created divergent performance trajectories. Redwire’s struggles highlight the sector’s vulnerability to execution risks, even amid macro-level demand.

Bearish Playbook: Options and ETFs for a Volatile RDW
• Technical Indicators: RSI at 21.66 (oversold), MACD -0.597 (bearish), 200D MA at $14.07 (above current price)
• Key Levels: Support at $11.14–$11.50 (200D range), resistance at $15.98–$16.10 (30D MA)

Redwire’s technicals and options activity suggest a continuation of the downtrend. The stock is trading below its 200-day moving average with an RSI in oversold territory, but this does not guarantee a rebound. A bearish breakout below $9.405 (intraday low) could trigger further selling. For options traders, the RDW20250815P9 and RDW20250815P9.5 contracts stand out:

• RDW20250815P9 (Put, $9 strike, 8/15 expiry):
- IV: 83.38% (high volatility)
- LVR: 40.00% (high leverage)
- Delta: -0.285 (moderate sensitivity)
- Theta: -0.0097 (low time decay)
- Gamma: 0.270 (responsive to price swings)
- Turnover: 9,262 (liquid)
- Payoff at 5% downside (9.13): $0.88 per contract. This put offers asymmetric upside if the stock gaps down.

• RDW20250815P9.5 (Put, $9.5 strike, 8/15 expiry):
- IV: 84.19% (high volatility)
- LVR: 21.33% (moderate leverage)
- Delta: -0.439 (strong sensitivity)
- Theta: -0.0059 (low time decay)
- Gamma: 0.310 (high responsiveness)
- Turnover: 3,801 (liquid)
- Payoff at 5% downside (9.13): $0.37 per contract. This put balances leverage and liquidity for a bearish bet.

Action: Aggressive bears should prioritize RDW20250815P9 for maximum leverage. If the stock breaks below $9.405, consider rolling into RDW20250822P9 for extended exposure.

Backtest Redwire Stock Performance
The backtest of RDW's performance after an intraday plunge of at least -30% shows mixed results. While the 3-day win rate is 46.15%, indicating a higher probability of recovery in the short term, the 10-day and 30-day win rates are lower at 39.56% and 35.16%, respectively. This suggests that while RDW may bounce back within a few days, its performance over longer periods following a significant downturn is more uncertain.

Redwire at Crossroads: Rebound or Reckoning?
Redwire’s 30% plunge reflects a crisis of confidence, but the U.S. Army contract and long-term space infrastructure opportunities remain intact. Investors must weigh the company’s execution risks against its strategic value in defense and orbital infrastructure. The stock’s near-term path hinges on a critical support level at $9.405; a break below this could accelerate the downtrend. Meanwhile, sector leader Lockheed Martin (LMT) is down 1.16%, signaling broader defense sector caution. For now, short-term bears should prioritize options like RDW20250815P9, while long-term investors may monitor the Army’s evaluation of the Stalker drone. Watch for $9.405 breakdown or a surprise rebound above $11.50.