What happened

Satellite manufacturing start-up Terran Orbital (LLAP 4.62%) got off to a great start on Tuesday, its shares rising 10% at the open -- but then things quickly went in the other direction.

Analysts had forecast Terran Orbital would lose $0.20 per share on sales of $31.2 million in its fiscal Q4 2022. In fact, Terran's sales came in above that prediction at $31.9 million, which might explain the shares' initial outperformance. Unfortunately, Terran lost more money than analysts had thought it would lose: $0.23 per share.

And now Terran Orbital shares are down 6.2% as of 1:10 p.m. ET.

So what

On the top line, Terran sales tripled in Q4 2022 as compared to Q4 2021, with sales growth accelerating as the year progressed and benefiting in particular from Terran's delivery of 10 new "transport layer" satellites for a Space Force missile defense contract awarded to defense contracting giant Lockheed Martin (LMT 0.60%).

Full-year revenue growth was a slower-but-still-speedy 130%.

Unfortunately for Terran, its cost of goods sold rose even faster than the sales themselves, quadrupling in Q4 and nearly tripling for the full year. Operating costs similarly soared -- up 2x for the quarter and more than 150% for the year. On the bottom line, this resulted in a $0.23-per-share loss for the quarter and a $1.28-per-share loss for the year.

Now what

And yet...if you look closely at the numbers, it turns out that these losses were actually improvements for Terran Orbital compared to 2021 numbers, when Terran Orbital lost $0.51 per share in Q4 2021 and $1.81 per share for the full year. So how did these losses seemingly diminish, given that operating and other input costs rose so much faster than revenues last year?

Well, not to put too fine a point on it, but these are per-share losses we're talking about -- and since taking itself public via a SPAC IPO last year, Terran Orbital now has a lot more shares among which to spread out its losses. Indeed, the company's share count has expanded by 82% since one year ago, a fact that explains the bulk of the decline in the company's losses per share.

The good news for investors is that Terran Orbital's SPAC IPO happened in March 2022, and the company's share count -- while still inching higher -- has settled down a lot since then. In future quarters, company GAAP losses (or, more hopefully, profits) should more closely resemble its per-share losses (or profits). That'll make it a whole lot easier for investors to figure out if Terran Orbital is on course to dive or thrive.