Redwire stock: Here's what a $5,000 investment could look like in 5 years

Redwire (NYSE: RDW) shares have surged twice over the past couple of years, only to fall off a cliff. It's a frustrating cycle given the company's intriguing growth potential as a supplier of components for space systems. Sometimes, volatility can create a life-changing buying opportunity, while other times, it's a signal to stay away.

It's crucial to understand what has held Redwire stock back in order to gauge what a $5,000 investment might look like in five years.

Strong growth potential, held back by two red flags

Redwire supplies crucial components and systems to several high-growth industries, including satellites and drone systems, for both commercial and government applications.

The company reported first-quarter revenue of $97 million, up 57% year over year. Even more impressive was Redwire's 1.92 book-to-bill ratio, meaning that it booked far more new orders than it billed to customers. It points to the company's strong growth momentum. Management anticipates full-year sales of $450 million to $500 million, 49% growth from last year's $335.4 million at the high end of guidance.

However, Redwire is deeply unprofitable. The business has burned roughly $165 million in free cash flow over the past four quarters, and net losses are even worse at $300 million. Redwire's share count has risen, roughly tripling since early 2025, and management announced a new offering in June to sell up to $500 million of new common shares on the market.

Suppose you invested $5,000 today

Although Redwire's revenue could grow by 49% this year, it's asking a lot to assume the company sustains that growth rate. Instead, I'll assume revenue grows at an annualized rate of 25% over five years. Starting with last year's $335 million in sales, revenue would hit $1 billion in five years.

The stock also seems a bit expensive at 10 times its trailing-12-month earnings. For instance, Heico, an established aerospace components company, trades at 3.4 times sales. That company is growing at about 17% but is already profitable. I'll assume that Redwire's valuation ultimately settles at 5 times sales.

Based on all that, Redwire would trade at a market value of approximately $5 billion in five years. That's a 150% return on the stock's current market cap of $2 billion, making Redwire a winner from here. Remember, that assumes a lot goes right over the next five years and doesn't factor in the recent $500 million offering or any additional shares added to the float during that period. The reality is that the returns could be far lower, even if the business does well.

Given the math above, I probably wouldn't chase Redwire at higher prices than where it is right now. That's at about $9 per share, far below its 52-week high. Above that, the risk becomes too high and the potential reward too low.

Justin Pope has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Heico. The Motley Fool has a disclosure policy.