Firefly's a Buy After Doubling Sales in Q3

Firefly Aerospace (NASDAQ: FLY) closed out last week strong, first defying a market mini-crash to gain 17% on Thursday, then adding another 7% Friday -- and rising another couple of percentage points after close of trading. In the space of two trading days, a space stock that had started looking an awful lot like a broken IPO -- down 75% from its high, and trading 60% below even its IPO offer price -- suddenly rebounded to nearly $23 per share.

And earnings were the reason.

Firefly Blue Ghost shadow on the moon. Image source: Firefly Aerospace.

Firefly Q3 earnings

Although not yet profitable -- indeed, according to analysts polled by S&P Global Market Intelligence, Firefly Aerospace is still at least a couple of years away from earning a profit -- this rocket stock made undeniable progress in Q3 2025.

Quarterly sales of $30.8 million grew 98% in comparison to Q2 2025, and were up 38% from Q3 2024.

The company won an additional $10 million payment from NASA for its Blue Ghost mission earlier this year, rewarding the company for providing "additional lunar data collected beyond the initial requirements." It signed an agreement to explore the potential for conducting Alpha rocket launches out of Japan. And Firefly won a fourth Blue Ghost lunar lander mission from NASA -- to deliver a payload to the moon's south pole in 2029 for $176.7 million.

All these developments promise further sales growth in future years. Nearer-term, management also raised its guidance to predict total fiscal 2025 sales between $150 million and $158 million -- well ahead of Wall Street analysts' forecast for $135.5 million.

Still, not all the news was good. Cost of sales for the quarter grew faster than sales themselves, up 53% year over year, research and development spending grew 63%, and selling, general, and administrative expenses more than doubled. Ultimately, despite sales growing 38% year over year, operating losses increased even faster at 82%, and on the bottom line, net losses for the quarter more than tripled to $133.4 million.

Firefly nonetheless was able to report smaller losses per share by virtue of the fact that, after conducting its IPO, its share count grew more than sevenfold to 93.8 million shares outstanding. With so many more shares to spread the losses around, per-share losses ended up at just $1.50, down more than half from one year ago.

Good news and bad news

Admittedly, these lower losses come at the cost of significant share dilution for Firefly's earliest investors, now that the market is flooded with new Firefly shares. And the fact that Firefly stock now trades far below its initial public offering price, I imagine, doesn't greatly please all the new investors, who flocked to buy all those new shares at the time of the IPO. Simply put, even after its post-earnings rally, Firefly's $23 share price is still only 51% of its IPO offer price. Recognizing that, Firefly still looks a lot like a broken IPO to me.

But might this far-fallen stock price mean that Firefly stock now provides a buying opportunity to even newer investors who missed out on the IPO?

Perhaps.

How to value Firefly stock

Lost in all the enthusiasm surrounding Firefly's earnings beat, I suspect, is the even more significant fact that Firefly just completed its acquisition of defense contractor SciTec -- and from where I sit, this acquisition has changed the valuation picture on Firefly stock significantly.

Last time I looked closely at Firefly's valuation, the stock was trading for $7.2 billion and expected to generate about $145 million in sales this year, resulting in a price-to-sales ratio of nearly 50. Roughly a week post-earnings, however, Firefly's market capitalization is now down almost half from where I last looked at it -- while its revenue potential has roughly doubled.

Between organic growth at Firefly proper, plus the new revenue that SciTec will bring in, analysts are looking for Firefly to produce as much as $446 million in revenue for 2026, which yields a P/S valuation of about 7.3 on the stock.

That's still not obviously cheap for a space stock. But it is significantly cheap-er than the stock looked pre-earnings and pre-SciTec. Depending on how fast the company grows post-merger, and depending even more on whether the company can begin earning profits sooner with SciTec than without it, I can see an argument forming that Firefly stock could finally be a buy.

And I'll be watching even more closely once the first post-merger earnings report comes out three months from now.

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.