Please ensure Javascript is enabled for purposes of website accessibility

Why Butterfly Network Stock Is Soaring 20% Today

By Brett Schafer – Jan 11, 2022 at 8:01AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The company announced preliminary fourth-quarter results this morning.

What happened

Shares of Butterfly Network (BFLY -4.59%) 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.

A person getting an ultrasound.

Image source: Getty Images.

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. 

Brett Schafer 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.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.