York Space Systems shares plunge as short seller warns Pentagon contract loss threatens growth
Shares of York Space Systems dropped more than 10% on Monday morning after short seller Wolfpack Research announced a short position in the company, citing the elimination of its primary revenue source.
Wolfpack Research said 96% of York's 2025 revenue came from selling satellites to the Pentagon's Space Development Agency (SDA), which is being dissolved. In late April, the Pentagon announced it eliminated future funding for the SDA's Tranche 3 Transport Layer and is dissolving the SDA.
The company's January initial public offering was based on continued growth as the provider for the SDA's Transport Layer program. According to Wolfpack, the program is being replaced with the Space Data Network (SDN), which names SpaceX's Starshield as the provider in Pentagon budget documents made public on April 28.
The Pentagon's budget documents, known as J-Books, indicate SpaceX is the incumbent provider for the SDN backbone in the fiscal year 2027 budget with no competitive solicitation for a second satellite vendor, Wolfpack said.
York Space Systems has relied on the SDA for over 90% of its revenue annually. The company's major program involves selling Transport Layer satellites to the SDA's Proliferated Warfighter Space Architecture program. York has described itself as the largest awardee by satellite volume for Tranches 0, 1, and 2, which drove the company's 52% year-over-year revenue growth.
York's chief executive denied the Transport Layer was being terminated after the latest earnings call before the Pentagon's announcement. The company is scheduled to hold its next earnings call on Wednesday.
Wolfpack Research spoke with multiple former employees who were critical of York and said the company deceived the SDA to win contracts, cut corners, and delivered satellites whose mission-critical software was not completed.