Why Firefly Aerospace Stock Sank 27% Last Month

Shares of Firefly Aerospace (NASDAQ: FLY) fell 27% in November, according to data from S&P Global Market Intelligence. A spaceflight disruptor that went public back in August, Firefly is growing quickly but getting pulled down by general post-IPO (initial public offering) selling dynamics as well as the market falling out of favor with fast-growing unprofitable companies.

Here's why Firefly Aerospace stock fell 27% last month, and is now down 66.5% from all-time highs.

Fast growth and a new acquisition

Firefly Aerospace is an exciting company, breaking the mold of the stodgy space industry in the United States with its flight and lunar landing technology. Along with the likes of SpaceX and Rocket Lab, Firefly is one of the only spaceflight companies to successfully perform rocket launch missions for commercial customers. It is also the first company to deliver a landing module to the moon with its Blue Ghost missions.

With launch, lunar modules, and orbital products, Firefly Aerospace is experiencing rapid growth at the moment. Revenue was up 38% year-over-year last quarter, and expects at least $150 million in revenue in 2025. Next year, growth is expected to continue, most notably due to its acquisition of SciTec, a national security software company that it is going to fold into its operations. SciTec was doing $164 million in revenue at the time of the acquisition. Combine this with the growth of the existing Firefly business, and the company could be pushing $400 million in sales next year.

Image source: Getty Images.

Is Firefly Aerospace Stock a buy?

Growing quickly in an expensive-to-operate industry like rocket launches makes for a tough combination for generating a profit. Firefly Aerospace is highly unprofitable, posting an operating loss of $62 million last quarter on just $31 million in revenue. These losses are likely scaring investors out of their positions at the moment. The falling share price is also typical of a post-IPO stock as insiders begin to sell their shares from when the company was private.

Firefly may be an interesting recent IPO, but it is still a nascent company with a lot of risks. It has only performed five commercial launches for customers, making it much smaller than competitor Rocket Lab, let alone industry giant SpaceX. It also trades at a high multiple of revenue while losing a boatload of money every quarter. Put all of this together, and it is no surprise that Firefly Aerospace stock fell last month.

Brett Schafer has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Rocket Lab. The Motley Fool has a disclosure policy.