Why BlackSky Technology Stock Dropped Today
Key Points
BlackSky missed badly on sales and earnings this morning.
Analysts don't see the spy satellite operator earning profits before 2027 at the earliest.
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Shares of spy satellite operator BlackSky Technology (NYSE: BKSY) stock tumbled 5.5% through 9:50 a.m. ET Thursday after reporting worse-than-expected losses this morning -- and missing badly on revenue as well.
Heading into the report, analysts already weren't optimistic, forecasting BlackSky to lose $0.35 per share on sales of under $29 million. In fact, BlackSky's losses totaled $0.44 per share, and revenue was less than $20 million -- just $19.6 million.
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BlackSky Q3 earnings
BlackSky's sales are moving in the wrong direction, down 13% year over year. Sales growth is also now negative for the year to date -- a bad trend for a supposed growth stock.
Quarterly losses climbed 21%, and negative free cash flow has quadrupled to $19 million burned so far this year.
CEO Brian E. O'Toole tried to put a brave face on the news, focusing less on financial performance than on "strong international demand for our space-based intelligence solutions," and emphasizing the company's $60 million in new contract awards and $323 million in contracted backlog.
Is BlackSky stock a buy?
Winning $60 million in contracts was probably the highlight of the quarter. With a book-to-bill ratio of more than 3 for the quarter, it's a virtual certainty that BlackSky's weak sales growth in Q3 will improve in quarters to come.
What's less certain is whether BlackSky will be able to earn a profit off these sales with its margins deteriorating. Analysts polled by S&P Global Market Intelligence think BlackSky can turn its first profit by 2027, but positive free cash flow won't emerge before 2028.
If BlackSky can hit those targets, it might be a decent buy eventually. But even as a fan of space stocks, I have to admit: Things look pretty bleak for BlackSky today.
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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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