Evaluating FLY Stock's Actual Performance

The stock for space technology specialist Firefly Aerospace (NASDAQ: FLY) shot up like a rocket on its recent August initial public offering (IPO) date, closing 34.1% higher on its first day of public trading.

But how has the company been doing since? Should early investors be pleased? And what about those who didn't buy in early: Is it already too late?

Here's how Firefly investments have really done.

Image source: Getty Images.

IPO investors: failure to launch

Firefly originally proposed a per-share initial public offering (IPO) price of $35 to $39. Later, the company increased the proposed range to between $41 a share and $43 a share. However, the shares finally went public on Aug. 7 at $45 a share, which gave the fledgling company a market cap of more than $6.4 billion.

Since its IPO, though, Firefly's stock has been on a downward trajectory. It's currently trading for $19.91 a share, down 55.6% from its IPO price.

Houston, we have a problem.

Meanwhile, the broader market, as measured by the S&P 500 index, is up 8.2% over the same time frame, meaning IPO investors in Firefly are currently losing to the market by 63.8 percentage points.

Day one investors: an even harder landing

Keep in mind that very few investors actually managed to pay Firefly's $45 a share IPO price, because as soon as the stock started trading, it shot up to $70 a share, briefly hitting an intraday high of $73.80 a share before closing out its first day at $60.35 a share, giving the company a market cap of $8.8 billion. Practically everyone who bought shares on the open market on the first day paid at least $60.35 apiece for their shares.

Those stockholders are in even worse shape than those who bought at the IPO price. At its current price, Firefly's shares are down 67% from its Aug. 7 close, meaning most first-day investors are already losing to the S&P 500 by more than 75 percentage points.

Adding insult to injury

Not only have the prices of Firefly investors' shares declined sharply since its IPO, but the underlying value of those shares has also been diluted. On the IPO date, Firefly had 146.5 million shares outstanding. Since then, however, the company has issued almost 13 million additional shares, most of which were used to pay for the acquisition of defense software company SciTec. That's an 8.7% increase in share count, which makes each existing stock share a bit less valuable.

Buying a company on its IPO date is always risky, and it's usually wiser to wait until the company has released at least a couple of quarters' worth of earnings reports to get a better picture of its operations and prospects for growth. Those who waited to buy Firefly now have the opportunity to buy in at a much more attractive valuation, although many risks remain.

John Bromels 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.