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Cathie Wood Is Building Up Her Stake In This Stock, Should You?

Cathie Wood Is Building Up Her Stake In This Stock, Should You?

Posted On August 31, 2022 1:27 pm
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Butterfly Network (BFLY) is a digital health company that develops, manufactures, and commercializes ultrasound imaging solutions in the United States and internationally. The company provides Butterfly iQ, a handheld and single-probe whole body ultrasound system; Butterfly iQ+, a point-of-care ultrasound imaging device; and Butterfly Blueprint, a system-wide ultrasound platform with Compass software.

In addition, BFLY offers cloud-based software solutions to healthcare systems, in-app educational tutorials, tele-guidance, and formal education programs through its Butterfly Academy software and clinical support and services.

BFLY has plunged 19% in price year-to-date and 53.8% over the past year to close the last trading session at $5.55. The stock is currently trading 59.1% below its 52-week high of $13.56, which it hit on September 7, 2021.

Renowned investor Cathie Wood has recently loaded up shares of BFLY to take advantage of its price dip. Yesterday, Wood bought over 105,000 shares of BLFY. The stock has 6.1% ARK ownership.

The digital health company reported deteriorating financials. For the fiscal 2022 second quarter ended June 30, 2022, BFLY’s revenue increased 16.4% year-over-year to $19.22 million, but the company’s loss from operations widened 32.1% from the year-ago value to $48.46 million.

Furthermore, BFLY’s adjusted EBITDA loss stood at $37.82 million, compared to a $28.49 million loss in the prior-year quarter. The company’s net loss and loss per common share attributable to Class A and B common stockholders came in at $35.80 million and $0.18, worsening significantly from the year-ago quarter.

It is also concerning that the company’s cash burn is increasing. As of June 30, 2022, BFLY’s cash and cash equivalents amounted to $310.80 million, versus $422.84 million as of December 31, 2022.

On the other hand, on March 9, Bothell, Washington-based Fujifilm Sonosite filed a patent infringement lawsuit against BFLY. The company claimed that the rival ultrasound maker violated seven patents tied to handheld, point-of-care ultrasound. In defense, on August 8, BFLY filed a motion to dismiss claims and specific patents from a complaint for a patent infringement lawsuit.

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The digital health company believes the lawsuit lacks merit and is meant to distract from Fujifilm’s failure to innovate and keep pace with BFLY’s clinical assessment platform.

Here is what I think could influence BFLY’s performance in the upcoming months:

Weak Growth Prospects

Analysts expect revenues to increase 46.4% year-over-year to $21.40 million in the fiscal 2022 third quarter (ending September 2022). However, the consensus loss per share estimate for the ongoing quarter is expected to come at…

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