Investors in Applied Aerospace & Defense Inc. received a mixed signal on Wednesday as the stock traded below its initial public offering price during its first day on the New York Stock Exchange. The shares, which opened at $20.75, slipped to $19.73 by afternoon trading, marking a 1.35% decline from the $20 offer price.
The Huntsville, Alabama-based company raised $650 million in its IPO, selling 32.5 million shares at $20 each. At the opening price, the company was valued at approximately $3.54 billion. The stock traded in a range between $18.95 and $20.95 during the session.
Applied Aerospace specializes in complex hardware for space and defense programs, including systems tied to space launch, defense aviation, and precision-strike markets. The company was formed from businesses with long operating histories, including Applied Aerospace and PCX Aerosystems, and is backed by private equity firm Greenbriar Equity Group.
While the company reported impressive revenue growth of 24.8% in 2025, reaching $498.8 million, its financial health raised concerns among investors. The company posted a net loss of $17 million for the year, and its balance sheet showed approximately $1.02 billion in debt as of March 31. For the first quarter of 2026, Applied reported revenue of $134.4 million and a net loss of $15.1 million.
Customer concentration emerged as a key risk factor. According to the company's filing, three customers accounted for 59% of 2025 revenue and 60% of accounts receivable, leaving the company vulnerable if any major program slows or a buyer changes suppliers.
On the positive side, Applied Aerospace has a significant order cushion. Its contract backlog, representing signed work not yet billed, stood at $1.06 billion as of March 31, up from $871.3 million at the end of 2025.
The broader market context was not supportive. The SPDR S&P 500 ETF was down 0.57%, and the iShares U.S. Aerospace & Defense ETF fell 0.56% during regular trading. The sector has seen several recent IPOs, including Arxis, AEVEX, and HawkEye 360, with Arxis surging nearly 36% in its Nasdaq debut in April after raising $1.13 billion.
Morgan Stanley and Jefferies served as lead underwriters for the offering. The shares trade under the ticker symbol AADX, and the offering is expected to close on June 4, subject to customary conditions.
The first-day performance suggests that while investor demand for defense and space suppliers remains firm, concerns about debt levels, losses, and customer concentration are prompting caution. If public-market buyers decide these risks warrant a bigger discount, the stock could remain near or below the offer price even if defense spending stays strong.
