KeyBanc initiated coverage on Redwire Corporation (NYSE:RDW) with a "Sector Weight" rating due to concerns over dilution from deals.Redwire's stock has seen a significant decline, dropping 30% last month and over 75% from its all-time highs, attributed to executive changes and shareholder dilution.The company has a current backlog of $355 million and a book-to-bill ratio of 1.25, indicating a healthy influx of new contracts.Redwire Corporation (NYSE:RDW) is a defense and space startup that went public in 20 ...

Core Viewpoint - Redwire Corporation is facing significant challenges in profitability, leading to substantial shareholder dilution and a sharp decline in stock value, down over 75% from its all-time highs [1][6]. Financial Performance - Redwire's current market capitalization is $1 billion, with a share price of $6.20, reflecting a 30% drop last month [3]. - The company reported a revenue of $296 million, but its free cash flow was negative $167 million over the last twelve months [4]. - In the last quarter, Redwire lost $42 million on $103 million in revenue, indicating slowing revenue growth [6]. Business Operations - Redwire operates in the defense and space sector, focusing on autonomous aircraft, space exploration, and defense technologies, with a current backlog of $355 million and a book-to-bill ratio of 1.25 [3][4]. - The company is attempting to capitalize on increasing spending in space defense, including contracts like the Golden Dome project [3]. Shareholder Impact - The number of shares outstanding has approximately doubled in the past year due to the need for funding losses and the acquisition of Edge Autonomy [5]. - This dilution is expected to hinder long-term growth in earnings per share (EPS) and share price appreciation [5]. Market Challenges - Recent developments, including contract delays due to a government shutdown, have contributed to the stock's decline [6]. - Despite winning new contracts from defense and space-focused customers, the ongoing cash burn and shareholder dilution overshadow these wins [6][7].