Why York Space Systems Stock Just Crashed
Key Points
York Space missed badly on earnings last night.
York burned cash in Q1, but analysts predict the company will end this year in the black.
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York Space Systems (NYSE: YSS) stock crashed to Earth Friday, falling 18% through 1:15 p.m ET after missing on its Q1 earnings report last night.
Heading into the report, analysts polled by Yahoo! Finance already weren't optimistic, forecasting York to lose $0.11 per share for the quarter. But York reported a $0.68-per-share loss on sales of $116.3 million.
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York Space Q1 earnings
Sales grew 9% year over year at York, but the company's gross profit margin on its satellites shrank four full percentage points to 19%, resulting in gross profit declining 10% despite the higher revenues. Operating expenses increased, eating up all York's gross profit and leaving the company with operating and net losses.
On the cash flow statement, York showed cash burn of $86.6 million, about 7% worse than one year ago. Unless this cash burn rate moderates, York could end up consuming nearly $350 million through the end of this year.
What's next for York Space stock
Lucky for York, then, that it conducted a successful IPO back in February!
Thanks partly to rising interest in space stocks ahead of the SpaceX IPO, York was able to raise $583 million from its own IPO. Combined with the cash it already had, this leaves York with nearly $656 million in cash and equivalents today, sufficient to keep the company afloat probably through the end of 2027 if nothing else changes.
And something might change, in a good way. Analysts polled by S&P Global Market Intelligence believe York will generate positive free cash flow this year and turn GAAP-profitable as early as 2027, meaning York already has all the cash it needs to become self-funding in 2026.
If true, that's good news for York -- not a reason to sell.
Should you buy stock in York Space Systems 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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