Jim Cramer Suggests Avoiding Redwire (RDW) In A Rate Tightening Cycle

On September 16, Jim Cramer, host of the financial television program Mad Money, discussed the company Redwire Corporation (NYSE:RDW) during a live broadcast. Cramer cautioned investors against purchasing Redwire stock during a period of rising interest rates, stating that such a cycle makes it difficult to invest in companies that are losing money consistently.

In the second quarter of 2026, Redwire reported impressive top-line growth, with total revenue increasing by 89.6% year-over-year to reach a record $117.1 million. This surge was primarily driven by its defense technology segment, which secured strategic contracts and expanded programs with international defense partners. The company's gross margin also hit a record high of 27.8%, and its order backlog reached $542.1 million.

However, Redwire continues to struggle with profitability, reporting an adjusted EBITDA loss of $3.2 million and a net loss of $41 million for the quarter. The company's financial stability is further strained by high operating expenses and negative free cash flow. With a price-to-sales ratio of 4.96, Redwire's stock trades at a premium compared to the sector median and its historical valuation. Additionally, dilution from recent equity distribution agreements has increased the total share count.

Despite a decline in the number of hedge funds holding Redwire stock, some major funds increased their positions significantly. D E Shaw and Millennium Management raised their holdings by 72% and 349%, respectively, while Renaissance Technologies initiated a position worth nearly $115 million, making it the largest shareholder among the tracked funds.

Short interest stands at 18.66% of the public float, indicating a considerable level of bearish sentiment among short sellers concerned about the company's financial burn rate.