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Unusual Call Buy in Space Age 2.0 Small Cap at Cheap Valuation

by | Nov 30, 2021

Redwire (RDW) with an interesting trade on 11/30 as 1000 May $10 calls were bought $2.15 to $2.30 to open, and a name with significant February and May OTM call OI is that is currently under water. RDW shares have been under selling pressure and back to the October lows after surging to above $15 briefly a month ago after tweeting about its involvement in the Orbital Reef project. Orbital Reef is a commercial space station being developed in partnership with Blue Origin, Sierra Space and Boeing (BA) Space. RDW is a space infrastructure play with products such as its patented suite of in-space manufacturing and robotic assembly technologies which is revolutionizing the approximately $23 billion satellite manufacturing market. RDW has a market cap of $555M and trades 2.5X FY22 EV/Sales with revenues seen rising 50% in 2022 to $230M and seen reaching $1.4B+ by 2025 at a CAGR of 72%. RDW has over $220M of backlog and $220M in bids awaiting decision. The Space market is seen growing to $2 trillion in 2040 from $420B currently. RDW forecasts strong EBITDA and FCF growth through 2025 with EBITDA margins reaching 18% in 2025. Jefferies out in September at Buy with a $15 target noting the company has built a unique portfolio of space products, including spacecraft design, highly engineered components, and next-gen technology around in-space manufacturing with Redwire being well-positioned to capture emerging trends around a growing number of small sat launches and expansion into deep space exploration.

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