Why Shares of Karman Space & Defense Are Plummeting Today

Key Points

Karman failed to meet analysts' bottom-line estimates for Q3 2025. The company ended Q3 2025 with a record funded backlog. Shares are trading at a high P/E, so investors may want to wait for a further pullback before buying.10 stocks we like better than Karman ›

It's been a wild ride for Karman Space & Defense(NYSE: KRMN) so far in 2025. After holding its initial public offering in February, shares of the defense stock had soared more than 262% through this past Wednesday. Today, however, investors are demonstrating how the market is unforgiving if a company doesn't live up to its high expectations.

The company reported third quarter 2025 financial results yesterday after the bell rang, and investors are clearly unimpressed with the performance. Downwardly revised price targets for Karman stock are also contributing to the sell-off. As of 1:26 p.m. ET, shares of Karman are down 10.1%.

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According to investors, this rocket company's financial results weren't out of this world

Reporting $0.06 earnings per share (EPS), Karman fell short of analysts' expectations that the company would post Q3 2025 EPS of $0.11. At the top of the income statement, on the other hand, the company succeeded in beating analysts' estimates. Karman reported Q3 2025 revenue of $121.8 million compared to the consensus among analysts that it'd post sales of $118.1 million.

Karman ended the quarter with a record for funded backlog: $758.2 million at the end of the third quarter of 2025, a 30.8% increase from the end of 2024.

Based on Karman's Q3 2025 financial results, Baird analyst Peter Arment hiked the price target on Karman to $70 from $60. Though it seems bullish, shares closed yesterday at $74.98, so the price target implies downside of almost 7%. Reducing its price target to $85 from $93 today, RBC Capital, on the other hand, recognizes upside for Karman stock though it's more measured than it had been.

Is now a good time for investors to load up on Karman after the dip?

Ending the quarter with a record backlog bodes well for Karman's future, but with shares trading at 491 times trailing earnings, a lot of high expectations seem to be baked into the stock price. For now, investors may want to watch this one from the sidelines.

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Scott Levine 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.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.