Redwire Corporation (RDW) shares climbed Wednesday morning after landing a $44 million contract from the Defense Advanced Research Projects Agency. It's the kind of news that helps investors forget about a rough earnings report.
The Contract Details
The Phase 2 award funds the "Otter" program, which sounds like something out of a sci-fi novel but is actually a mission to demonstrate "air-breathing" spacecraft capabilities in Very Low Earth Orbit. Think of it as spacecraft that can operate closer to Earth than traditional satellites, opening up new defense possibilities.
Redwire will tap its U.S.-built SabreSat platform to manufacture and deliver the spacecraft. The company says this move will accelerate development of cutting-edge defense capabilities in the VLEO domain, which is exactly the kind of forward-looking language investors want to hear when a stock has been struggling.
Momentum Building
This announcement adds to positive momentum that started earlier this week. On Monday, Redwire announced the opening of a new 85,000-square-foot facility in Ann Arbor, Michigan. The expansion aims to double production capacity of critical fuel cells for Stalker Uncrewed Aerial Systems. Two pieces of good news in three days isn't bad.
These operational wins offer a rebound for the stock, which took a hit earlier this month following a third-quarter earnings miss. On November 5, Redwire reported a loss of 37 cents per share on revenue of $103.43 million, missing analyst estimates. Not great.
However, Wednesday's contract validates something the company had been talking about: a growing backlog that reached $355.6 million at the quarter's end. Backlog is nice because it represents future revenue, even if current earnings aren't where they need to be.
Stock Movement
Redwire shares were up 5.79% at $6.54 at the time of publication Wednesday. The stock has experienced recent volatility with negative price trends across short, medium and long-term horizons, making this contract win a welcome development for shareholders who've been holding through the turbulence.
