Why Redwire Stock Popped on Tuesday

Redwire Corporation (NYSE: RDW) stock investors had an amazing day Tuesday, with their stock closing up 9.4% on a couple of announcements suggesting Redwire has momentum:

Yesterday, Redwire announced a "major expansion" of its Huntsville, Ala., factory for building Stalker UAS armed surveillance drones.

And today, Redwire opened a second factory in Georgetown, Ind., to produce "microgravity payloads" for operation in space.

Redwire's a space stock -- and a defense stock, too

Redwire started off life as a space company, specializing in developing space "infrastructure" -- not rockets or satellites per se, but primarily equipment for use in space, on board satellites and space stations.

Early last year, Redwire pivoted hard into the defense sphere, spending $925 million to acquire drone company Edge Autonomy and its portfolio of artificial intelligence-enhanced military drones.

This week's twin announcements confirm Redwire's interest in keeping both these businesses -- and indeed expanding them. The Huntsville factory will add 164,000 square feet for both space and defense production. Redwire plans to complete construction by Q4 2027.

Meanwhile, in Indiana, Redwire just opened an additional 30,000 square feet of space to develop microgravity payloads for conducting experiments and manufacturing goods in Low-Earth Orbit and on the moon. Redwire noted in its announcement that the focus of the Georgetown facility will be "pharmaceutical/biotech innovation."

Redwire's biggest risk

Unmentioned in either announcement, I fear, is the cost of expanding and building the facilities -- but that's definitely a number investors should watch out for. Redwire reported losses of $300 million over the last 12 months and is burning cash at the rate of about $155 million per year.

Building new factories may be necessary as Redwire scales up. It's not doing the company's bank account statement any favors, though.

Rich Smith has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.