Firefly Aerospace's Valuation Reset: From Broken IPO to Potential Opportunity

The Stock Rebound That Changed the Narrative

Firefly Aerospace (NASDAQ: FLY) delivered a dramatic two-day rally last week—gaining 17% on Thursday and another 7% Friday, plus additional percentage points in after-hours trading. The catalyst was simple: earnings that beat expectations combined with forward guidance that surprised the market in the right direction.

The numbers tell the story of a turnaround in progress. After trading down 75% from its peak and sitting 60% below its original IPO offer price, Firefly suddenly rebounded to nearly $23 per share. What triggered this reversal? A company that had started to look like a classic broken IPO suddenly demonstrated why institutional patience might be justified.

Breaking Down the Q3 Performance

While profitability remains distant—analysts expect at least another couple of years before the company reaches black ink—Firefly made undeniable operational progress in the third quarter of 2025.

The headline: quarterly revenues hit $30.8 million, representing 98% growth versus Q2 and 38% year-over-year expansion from Q3 2024. This pace of acceleration proved faster than Wall Street had anticipated.

Beyond the topline, several contract wins reinforced revenue momentum:

• NASA awarded an additional $10 million for Blue Ghost mission data that exceeded initial specifications
• A partnership agreement was signed to explore Alpha rocket launches from Japanese territory
• Most significantly, NASA granted Firefly a fourth Blue Ghost lunar lander contract—valued at $176.7 million to deliver payload to the moon’s south pole in 2029

Management capitalized on this momentum by raising full-year 2025 guidance to $150-158 million, substantially ahead of the Street’s $135.5 million consensus forecast.

The Cost Side of the Equation

The earnings report wasn’t all celebration. Operating expenses painted a more cautious picture:

Cost of sales surged 53% year-over-year, outpacing sales growth. Research and development spending jumped 63%, while selling, general and administrative expenses more than doubled. The result: despite 38% revenue growth, operating losses accelerated 82% in comparison.

Net losses for the quarter tripled to $133.4 million on a GAAP basis. However, per-share losses of $1.50 represented less than half the year-ago figure—a mathematical benefit of the post-IPO share count expanding to 93.8 million shares outstanding.

The SciTec Acquisition Game-Changer

What may have gotten lost in the earnings excitement is Firefly’s completed acquisition of defense contractor SciTec—a transaction that fundamentally reshapes how to think about the company’s valuation.

Before earnings, Firefly’s market valuation stood near $7.2 billion against expected 2025 revenues around $145 million, generating a price-to-sales ratio exceeding 50x. That multiple screamed overvaluation for a pre-revenue-mature company.

Fast forward one week post-earnings: Firefly’s market cap has declined roughly 50% while its organic revenue trajectory has nearly doubled. Factor in SciTec’s contribution, and analysts now forecast 2026 revenues approaching $446 million. This mathematical shift yields a forward P/S ratio of approximately 7.3x—a material compression.

From Valuation Concern to Potential Value

The strategic recalibration is substantial. A space-focused company previously trading at 50x sales now appears to be repricing toward 7x forward revenue. While still not precisely “cheap” by historical space industry standards, the shift from richly valued growth story to potentially reasonably valued turnaround narrative represents meaningful change.

The path to profitability remains uncertain, and significant share dilution has penalized early IPO investors. Yet the convergence of faster organic growth, new contract wins with NASA, geographic expansion potential through Japan partnerships, and accretive M&A creates a different risk-reward profile than existed 10 trading days prior.

For investors considering entry, the next three months become crucial—specifically, when the first post-merger earnings report arrives and provides visibility into SciTec integration economics and combined margin trajectory.