Why Butterfly Network Stock Is Soaring 20% Today

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What happened

Shares of Butterfly Network (NYSE:BFLY) soared over 20% on Tuesday morning after the company released preliminary results for its fourth quarter and full-year 2021 earnings. As of 12:05 p.m. ET today, the maker of ultrasound devices is up 19.8% for the day.

So what

Before the market opened this morning, Butterfly Network put out a press release outlining its financial results for the end of 2021. Revenue for the fourth quarter is expected to be between $17.9 million and $18.9 million, and full-year revenue is expected to be between $61.5 million and $62.5 million.

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Back in November, Butterfly Network decreased its revenue guidance for the full year to a range of $60 million to $62 million, which caused the stock to sell off heavily over the past few months. Even after today’s rise, the stock is down around 30% in the last three months alone. Given the slight revision to higher revenue guidance for 2021, investors have likely gotten slightly more bullish on Butterfly stock today. 

What’s more, in the press release, executives announced that the University of Rochester Medical Center will deploy the Butterfly IQ+ device across its clinical enterprise segment. The more doctors who use Butterfly’s devices, the more likely it is that the company will create long-term customers for its products, so investors were likely bullish about this partnership announcement as well.  

Now what

With the stock up so much today, Butterfly Network now has a market cap of $1.5 billion. Even if it hits the high end of its guidance of $62.5 million, that still gives the stock an expensive price-to-sales ratio of 24. If you’re thinking of buying the stock, you need to be optimistic about its growth and eventual profit margin potential, given the stock’s current high sales multiple. 

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.