Why Firefly Aerospace Stock Popped Then Dropped Today
Key Points
Firefly beat on earnings by losing less money than expected.
The Q1 win was more ambiguous on sales, which grew 40% -- also more than expected.
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Space company Firefly Aerospace (NASDAQ: FLY) soared more than 17% in early trading on the Nasdaq Tuesday after beating on earnings last night -- then reversed. Shares of the rocket stock dropped 5% through 12:05 p.m. ET.
Analysts expected Firefly to lose $0.52 per share on $74.9 million in sales, but Firefly beat on both top and bottom lines. Losses came in at only $0.46 per share, and sales higher than expected at $80.9 million.
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Firefly Q1 earnings
Why are investors mad at Firefly stock today? Barron's points out that the space stock's operating losses were worse than forecast, but I wonder if that's enough "bad news" to explain a 22-point reversal?
After all, quarterly sales set a new record, up 40% year over year. Sales guidance ranges from $420 million to $450 million for the year, ahead of Wall Street estimates. And cost of sales is growing less than half as fast as sales revenue, greatly strengthening the gross profit margin.
What's next for Firefly stock?
Granted, selling, general, and administrative expenses nearly doubled in the quarter, rising much faster than sales, and that's the reason operating costs were worse than expected. What remains to be seen is if the investment in headcount will yield faster growth in future quarters.
In this regard, Firefly announced a series of progress reports, noting its Alpha rocket is upgraded and back in flight. Development of the larger Eclipse rocket also appears to be progressing. And Firefly is gearing up to put another Blue Ghost lander -- currently the only U.S. lander that's proven it can land upright -- on the moon (and a European satellite in orbit around it).
At 10 times sales, Firefly stock remains pricey, but it's making progress, and today's sell-off seems unwarranted.
Should you buy stock in Firefly Aerospace right now?
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Rich Smith 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.
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