Redwire Corp (NYSE:RDW) shares are sliding on Tuesday as investors rotate out of smaller space stocks and into SpaceX following its blockbuster IPO.
SpaceX’s historic market debut propelled the company to a roughly $2.1 trillion valuation. While the IPO initially boosted sentiment across the space sector, it has since become a magnet for capital.
Traders are selling holdings in smaller space companies, including Redwire, to fund purchases of the newly public aerospace giant, weighing on shares of legacy industry players.
Share Dilution Fears From $500M Equity Program
Compounding the pressure, Redwire announced a $500 million at-the-market (ATM) equity offering program last week. Selling up to $500 million in common stock over time would result in significant shareholder dilution for retail investors.
The size of the program also highlights potential cash burn concerns, maintaining a steady headwind for the equity.
Short Interest Surges To 22.43%
According to the latest reporting period, short interest in Redwire has increased. The number of shares held short rose from 29.52 million to 36.86 million, meaning short sellers now control 22.43% of the company’s publicly available float.
Based on a recent average daily trading volume of 74.46 million shares, it would take short sellers just 1 day to close out their positions.
Analyst Forecasts Show Wide Spread
Wall Street remains divided on the stock’s valuation. Redwire currently maintains a consensus price forecast of $13.02 based on ratings from 12 analysts.
Optimism peaked on June 1, when Jefferies issued a high price forecast of $24. Conversely, BofA Securities issued a low forecast of $6 on November 19.
RDW Stock Price Activity: Redwire shares were down 2.5% at $14.46 at the time of publication on Tuesday, according to Benzinga Pro data.
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