Why Is FireFly Aerospace Stock Soaring Today?
Key Points
Firefly announced it is acquiring a defense technology company for $855 million.
The company hopes to be selected for the potentially lucrative Golden Dome project.
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Shares of Firefly Aerospace (NASDAQ: FLY) are soaring on Wednesday, up 11.2% as of 1:31 p.m. ET. The jump comes as the S&P 500 and the Nasdaq Composite gained 0.5% and 0.9%, respectively.
The space launch company's stock is climbing once again after announcing on Sunday that it is acquiring the defense technology company SciTec for $855 million in a bid to boost its national security offerings.
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Firefly will acquire SciTec
In a press release on Sunday, the company said that its acquisition of SciTec will allow it to better compete for defense contracts. SciTec's advanced software will improve tracking, missile warning systems, autonomous functionality, and other vital capabilities. These are especially important for the company's stated goal of winning contracts for the "Golden Dome" project, President Trump's missile defense system.
CEO Jason Kim said the acquisition will "significantly enhance our ability to deliver integrated, software-defined solutions for critical national security imperatives, particularly Golden Dome." The acquisition comes on the heels of a significant setback for the company in which a rocket exploded at its test facility.
Firefly's balance sheet looks iffy
While defense and space programs can be highly lucrative, developing and building these systems is incredibly capital-intensive, and Firefly already carries a concerning amount of debt. The company only brought in $60 million last year and lost $270 million. Despite these numbers, its market capitalization sits north of $4.5 billion. I would avoid the stock.
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Johnny Rice 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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