Redwire (RDW 15.83%) stock, the space stock that turned itself into a drones stock too when it purchased Edge Autonomy last year, tumbled 15.7% through 12:55 P.M. Monday.
You can probably blame Jefferies & Co. for that.
Image source: Getty Images.
What Jefferies says about Redwire
In a note covered on StreetInsider.com this morning, Jefferies analyst Greg Konrad downgraded Redwire from buy to hold at the same time as he raised his price target to account for Redwire's astoundingly successful stock price -- which more than doubled in May.
Redwire has actually been fortunate all year long, notes the analyst, more than tripling in share price year to date, primarily on "multiple expansion" -- meaning that investors seem suddenly willing to pay much more for Redwire's sales (and lack of profits) this year than they used to.
How to explain this?
Jefferies points out the obvious: "general excitement around space has driven the stock price move" in the wake of SpaceX announcing first that it will IPO, then setting a date for the IPO, and finally revealing its prospectus for investors to read.
NYSE: RDW
Key Data Points
What's next for Redwire?
So that's the good news: Investors have caught space fever, and thanks almost entirely to SpaceX finally going public, they've decided to buy everything but SpaceX before it does.
That doesn't make a whole lot of sense to me, honestly. More worryingly -- to me and apparently to Jefferies, too -- it has made Redwire stock frighteningly expensive. As a result, the analyst warns: "We see limited ... upside from here" after the strong price surge, and in the absence of profits despite revenue gains.
My thoughts exactly. If you want to own SpaceX, it makes sense to sell Redwire and buy SpaceX in a couple weeks instead! In fact... that may be exactly what is happening today.
