European Sales Narrative Clashes with Redwire's Financial Reality

What happened

A Seeking Alpha article touts Redwire's surging European sales and technical milestones, claiming 117% growth in FY24 to $153.8 million and projecting further expansion. However, SEC filings from the DeepValue report show European revenue actually declined to $85.8 million in the first nine months of 2025 from $129.3 million a year earlier, contradicting the bullish narrative. This discrepancy occurs amid severe financial deterioration, with gross margin collapsing to 3% and operating cash flow negative $153.1 million over 9M25, driven by unfavorable contract adjustments and acquisition costs. The $925 million Edge Autonomy deal has bloated the balance sheet with $800 million of goodwill, while dilution and material control weaknesses persist. Investors should view the positive spin with skepticism, as underlying fundamentals remain weak and cash burn continues unabated.

Implication

First, the article's optimistic claims conflict with hard SEC data, highlighting potential propaganda and the need for rigorous verification. Second, European sales declines undermine growth projections, suggesting demand mix volatility or execution issues in key markets. Third, with gross margin at 3% and adjusted EBITDA negative, the core business remains unprofitable despite revenue shifts, questioning scalability. Fourth, high goodwill and dilution risk subordinate common equity, making it vulnerable to impairment if integration fails. Fifth, until Redwire demonstrates consistent margin recovery above 10% and positive cash flow, the stock warrants caution, aligning with the DeepValue 'Potential Sell' rating.

Thesis delta

The investment thesis remains unchanged: Redwire is a speculative sell at current levels due to financial distress, cash burn, and integration risks. This news reinforces skepticism towards management narratives and underscores the importance of grounding analysis in SEC filings over promotional content. No fundamental improvement is evident, and the bear case of stagnation and impairment remains plausible.