Firefly Aerospace IPO Could Be One of the Year's Biggest, But Is It Overvalued?

Key Points

• Still riding the momentum of its successful moon mission earlier this year, Firefly Aerospace is one of the most successful IPO stocks of 2025.

• Its valuation is undoubtedly high, but investors should focus more on evaluating the quality of the business as well as the long-term opportunity of its market.

• 10 stocks we like better than Firefly Aerospace ›

On Aug. 6, Firefly Aerospace (NASDAQ: FLY) had its initial public offering (IPO) at $45 per share. As of this writing, Firefly stock is already over $50 per share, as investors are eager to get their hands on shares of the first fully successful private company to land on the moon.

At its current share price, Firefly Aerospace is valued at roughly $7.4 billion. This puts the space stock into the top 10 most valuable IPO stocks of 2025. But is it already overvalued here at the start? The answer may not be as cut-and-dried as investors hope.

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Image source: Getty Images.

How does Firefly make money?

It's usually a bad idea to start by thinking about a stock's valuation. A better idea would be to size up a business's quality and future opportunity. Low-quality companies with bleak outlooks likely won't be good investments, regardless of valuation.

For its part, Firefly generates revenue from launching rockets for its customers, and it also generates revenue from moon landings. According to the company, its addressable market for launching rockets could hit $32 billion in 2035, and its addressable market for moon landings could hit $9 billion in 2030. This gives investors a ballpark idea of how much spending it hopes to capture in the coming years.

As of the end of the first quarter of 2025, Firefly had trailing-12-month revenue of $108 million. And it had a backlog of $1.1 billion, which was up 100% from the first quarter of 2024. So, it clearly has room to grow from here.

Firefly's Q1 revenue of $56 million was up a staggering 572% year over year. But keep in mind that the company landed on the moon during the quarter. That doesn't happen often, but there's a big payday when it does.

Is Firefly stock overvalued?

Without a doubt, Firefly stock looks overvalued for a variety of reasons.

First, consider Firefly's lumpy revenue growth. It only grew by 10% in 2024 compared to 572% growth in Q1, making it hard to approximate a true growth rate. Moreover, Firefly stock has a sky-high price-to-sales (P/S) ratio of more than 70. Compare that to fellow space stock Rocket Lab, which trades at a P/S ratio of 48, which is still quite pricey as well, but far cheaper.

Firefly stock has surged because of a dynamic that many recent IPO stocks have. The company has nearly 147 million outstanding shares, but it only offered about 19 million. This means that there's a relatively small supply of shares available for trading, but there is high investor demand for space stocks. The imbalance naturally pushes valuations higher.

Firefly stock is expensive, but it's still worth considering for its future business opportunities.

Could Firefly stock be a good investment anyway?

Privately held SpaceX became one of the most valuable companies in the world by pioneering reusable rockets, which helped lower costs. Firefly is developing its own reusable rocket in partnership with Northrop Grumman. As one of the largest defense contractors in the world, this is a good partner, likely ensuring that the project will cross the finish line.

Right now, Firefly operates at a gross loss. Therefore, anything the company can do to lower costs could make a material difference to business results.

Another reason to have optimism with Firefly is that its top customers include the U.S. Space Force, Lockheed Martin, and NASA. These are demanding customers, to be sure. But they're also deep-pocketed if Firefly can reliably deliver on its promises.

With a company such as Firefly Aerospace -- relatively unproven and with a still small revenue base -- its valuation won't derail the investment thesis. To the contrary, it will be the company's execution.

To be clear, Firefly Aerospace has had launch failures in its history. The company's massive backlog is encouraging. But that's not money in the bank -- there are termination rights. Ongoing failures could cause customers to cancel contracts.

If Firefly Aerospace can consistently launch without failure and drive down costs, then it will likely win more business in this growing space. This would dramatically change the financial profile of the business. Valuing the stock today is almost impossible for this reason.

That said, I will throw out one cautionary thought in closing: The space industry is slow-moving even though the headlines are exciting. For example, NASA recently announced plans to put a nuclear reactor on the moon, accelerating plans for a permanent base. But even with the accelerated timeline, the agency is targeting a 2030 launch.

This example highlights that even if things are going well, Firefly Aerospace could need to endure losses for some time yet because it simply takes time to develop plans for outer space. For this reason, I'll patiently wait on the sidelines for the foreseeable future with this one.

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Jon Quast has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Rocket Lab. The Motley Fool recommends Lockheed Martin. The Motley Fool has a disclosure policy.