BFLY · Butterfly Network
Conviction · Medium · more likely to lead the S&P 500 over the next three months, by a modest margin
Wrong if: a daily close below $6.00
Note written ·
Price against the kill line
1.3% clear of its kill line on the 13 November 2026 close.
How to read this
The red mark is the price level of the published kill line: a close through it (a weekly close, on a weekly line) would prove the research note wrong on price. The dot is where the stock closed on 13 November 2026; a dot left of the mark has closed through its line.
The scale is stretched near the line, so close calls are easy to see. More than 8% from the line, the stock reads well clear, with a hollow dot to show the figure is off the drawn scale.
The kill line is the research note's own test. The portfolio sells on business facts, not on a price. How the portfolio decides
Three months against the kill line
Daily closes, to . Red: the kill line, a daily close below $6.00, on record since 10 November 2026. The shares are down 32.6% since the close; the S&P 500 is down 2.1% over the same sessions. Figures in the note can cover a different window.
Kill line
A daily close below $6.00, which would break under the early-November closing lows of $6.07 and $6.37 and show the post-earnings recovery failing; or fourth-quarter revenue below the $31 million low end of guidance, or a cut to the $123–126 million 2026 revenue range.
Research onlyNot in the portfolio.
Key figures from the filings · Health Care
Quarter to 30 September 2026, filed 29 October 2026; valuation at the 13 November 2026 close
- Revenue, latest quarter ($M)
- 32.6
- Revenue, change on a year (%)
- +51.7
- Gross margin (%)
- 73.0
- Operating margin (%)
- −41.7
- Free cash flow, four quarters ($M)
- −27.6
- Free-cash-flow yield (%)
- −1.7
All filed numbers
What Butterfly Network reports to the SEC in its quarterly and annual filings. Each group states its period and filing date once; a figure dated otherwise says so. Built from the filings known on .
| Quarter to | Revenue ($M) | On a year (%) | Gross margin (%) | Operating margin (%) |
|---|---|---|---|---|
| first filed | 32.6 | +51.7 | 73.0 | −41.7 |
| first filed | 32.6 | +39.5 | 71.4 | −41.9 |
| first filed | 26.5 | +25.0 | 68.9 | −52.3 |
| first filed | 31.5 | +41.0 | 67.3 | −53.0 |
| first filed | 21.5 | +4.5 | −17.5 | −163.5 |
| first filed | 23.4 | +8.8 | 63.7 | −68.9 |
| Pre-tax income ($M) | −12.8 |
| Net income ($M) four quarters: −53.7 | −12.8 |
| Diluted shares, change on a year (%) against the quarter to 30 September 2025 | +5.7 |
| Operating cash flow ($M) | −23.4 |
| Capital spending ($M) | 4.2 |
| Free cash flow ($M) | −27.6 |
| Cash and short-term investments ($M) | 122 |
| Debt ($M) | Not available |
| Net cash, cash less debt ($M) | Not available |
| Deferred revenue ($M) +11.4% on a year | 27.1 |
| Backlog, orders not yet delivered ($M) +99.5% on a year | 84.2 |
| Receivables ($M) | 37.4 |
| Inventory ($M) | 59.6 |
| Shareholders' equity ($M) | 184 |
| Market value ($M) | 1,620 |
| Enterprise value, market value plus net debt ($M) | Not available |
| Enterprise value to sales (×) | Not available |
| Enterprise value to operating income (×) | Not available |
| Price to earnings (×) | Not meaningful |
| Price to book value (×) | 8.8 |
| Free-cash-flow yield (%) | −1.7 |
Short interest (FINRA, settled 15 October 2026, published 26 October 2026): 12.6% of shares outstanding sold short, 6.2 days of average trading to cover, +6.2% since the previous report.
| Window | Bought | Sold |
|---|---|---|
| 90 daysfrom | $0 | $2.6M |
| 12 monthsfrom | $13.1M | $126.6M |
The thesis
Butterfly Network's case is its Embedded business, which licenses its ultrasound-on-chip technology to outside device makers. The third-quarter report on 29 October 2026 supported it, and the shares are more likely than not to beat the S&P 500 over the next three months. The fourth-quarter report, expected around late February 2027, settles whether the quarterly revenue level holds.
Third-quarter revenue was $32.6 million, above the company's $26–30 million guide. Management raised 2026 revenue guidance to $123–126 million from $119–123 million (8-K Exhibit 99.1, 29 October 2026). The fourth-quarter guide of $31–34 million brackets the $32.6 million just reported, so the guide asks for the level to hold, not to grow.
The shares have recovered part of the post-results slide. They closed at $6.07 on 5 November 2026, $6.37 on 6 November 2026 and $6.67 on 12 November 2026, after a close of $7.14 on 11 November 2026. The last close is 34.7% below the 52-week intraday high of $10.21 on 6 October 2026 and 24.5% below the $8.84 close of 14 August 2026. It sits below the 50-day average of $7.70 and above the 200-day average of $6.14.
Bullish and bearish views on Butterfly Network, Inc.
The bull case on Butterfly Network, Inc. (BFLY), in brief: the quarter beat its own guide. The bear case: the fourth-quarter guide implies no growth from the third quarter.
Bull case
- The quarter beat its own guide. Third-quarter revenue was $32.6 million, up 52% from $21.5 million a year earlier, against guidance of $26–30 million (8-K Exhibit 99.1, 29 October 2026).
- Margin and losses improved. Gross margin was 73.0%. The adjusted EBITDA (earnings before interest, taxes, depreciation and amortisation) loss was $1.2 million, against $8.1 million a year earlier, and the net loss was $12.8 million, against $34.0 million.
- The full-year guide rose. Revenue guidance is $123–126 million, and the adjusted EBITDA loss guide is $12–15 million (8-K Exhibit 99.1, 29 October 2026). Fourth-quarter guidance is $31–34 million with an adjusted EBITDA loss of $3–6 million.
- Cash is steady. Cash and cash equivalents were $122.3 million on 30 September 2026, against $124.7 million on 30 June 2026 (company releases).
- Home & Community Care has a start date. The first state entered implementation, with scanning starting in November and initial revenue expected in the fourth quarter (8-K Exhibit 99.1, 29 October 2026).
- Broker targets sit well above the price. Evercore ISI initiated at Outperform with a $15 target on 29 September 2026 and maintained its Buy rating on 31 October 2026. Needham and Canaccord Genuity each initiated at Buy with $10 targets on 22 September 2026 and 12 October 2026.
Bear case
- The fourth-quarter guide implies no growth from the third quarter. Guidance of $31–34 million compares with $32.6 million reported for the third quarter (company release, 29 October 2026).
- Embedded revenue arrives in lumps. Management said on the 29 October 2026 call that Embedded revenue may not be evenly distributed across quarters, because it follows partner programs and development milestones.
- Insiders keep selling. CEO Joseph DeVivo sold 90,600 shares at $7.01 on 30 October 2026 (SEC Form 4 filed 3 November 2026). The company's news flow on 12 November 2026 lists a Notice of Proposed Sale of Securities, which signals a further planned insider sale.
- Good news has the price. The shares closed at $6.67 on 12 November 2026, against $8.84 on 14 August 2026, a 24.5% decline over three months. They fell through three initiations, a partner agreement and the earnings beat.
- Most partner deals carry no disclosed value. Only Midjourney Medical's agreement, worth up to $74 million over five years, has a stated value. Mendaera, Aleph Neuro, Merge Labs and Bridge Neurotech terms are undisclosed.
Price setup
The last close was $6.67 on 12 November 2026. The 52-week intraday high is $10.21 on 6 October 2026, and the 52-week closing low is $1.97 on 17 November 2025. The shares closed at $6.07 on 5 November 2026, the lowest of the six sessions since, and have held above that close in each session since.
The 50-day average of $7.70 sits 15.4% above the last close and marks the nearest overhead resistance in the price history. The 200-day average of $6.14 sits below it and is the nearest moving-average support.
Insider supply is the main pressure on the shares. Two Rule 10b5-1 trading plans, the CEO's adopted 12 December 2025 and the founder's adopted 13 March 2026, allow scheduled sales at any price. Founder Class B sales convert into Class A shares and add directly to the float. Form 4 filings show open-market sales by the CEO, the chief accounting officer and the chief business officer between 2 September 2026 and 30 October 2026.
No earnings date falls inside the next 30 days.
Catalysts ahead
- ~30 November 2026 (est.): Home & Community Care first-state scanning begins. The company said scanning starts in November with first revenue in the fourth quarter; delivery supports the $31–34 million fourth-quarter guide.
- ~26 February 2027 (est.): Fourth-quarter and full-year 2026 results. Tests the $31–34 million fourth-quarter range and the $123–126 million full-year guide, the event that settles the call.
What would change the view
A daily close below $6.00, which would break under the early-November closing lows of $6.07 and $6.37 and show the post-earnings recovery failing; or fourth-quarter revenue below the $31 million low end of guidance, or a cut to the $123–126 million 2026 revenue range.
The risks this note tracks, each with what would confirm it:
- Embedded milestones slip and fourth-quarter revenue falls short of the guided range, as the segment is recognised in lumps. Confirmed by: fourth-quarter revenue below $31 million at the next report, or a cut to the $123–126 million full-year range.
- Insider and founder selling under Rule 10b5-1 plans caps the shares despite the earnings beat. Confirmed by: further Form 4 sales, or a Form 144 notice of proposed sale, by the CEO or founder while the shares fail to hold above the 200-day average.
- Home & Community Care revenue slips past the fourth quarter, leaving the services business at pilot stage. Confirmed by: a company disclosure that November scanning did not start, or that first revenue moved into 2027.
- Newer partners such as Mendaera and Bridge Neurotech add little licensing revenue because terms stay undisclosed or small. Confirmed by: no identifiable contribution from newer partners in fourth-quarter Embedded commentary and no new agreement with a disclosed value.
What it trades with
Butterfly trades on its own licensing and device story. Its closest links are small-cap medical-device and diagnostics shares, which respond to growth-stock risk appetite and interest-rate moves. The shares also react to analyst initiations and partner announcements, as on 22 September 2026 when Needham's initiation lifted them sharply and they retreated the next day.
The evidence, claim by claim (7)
- Third-quarter 2026 revenue was $32.6 million, up 52% from $21.5 million; gross margin was 73.0%; adjusted EBITDA loss was $1.2 million against $8.1 million. Butterfly Network 8-K Exhibit 99.1, third-quarter 2026 results · as of
- Full-year 2026 revenue guidance was raised to $123–126 million from $119–123 million; adjusted EBITDA loss guidance is $12–15 million. Butterfly Network 8-K Exhibit 99.1, third-quarter 2026 results · as of
- Fourth-quarter 2026 revenue guidance is $31–34 million with an adjusted EBITDA loss of $3–6 million. Butterfly Network 8-K Exhibit 99.1, third-quarter 2026 results · as of
- Cash and cash equivalents were $122.3 million at quarter end; net loss was $12.8 million against $34.0 million a year earlier. Butterfly Network 8-K Exhibit 99.1, third-quarter 2026 results · as of
- Home & Community Care entered implementation for its first state, with scanning starting in November and initial revenue expected in the fourth quarter. Butterfly Network 8-K Exhibit 99.1, third-quarter 2026 results · as of
- CEO Joseph DeVivo sold 90,600 shares in the open market at $7.01 on 30 October 2026. SEC Form 4 filed 3 November 2026 · as of
- Evercore ISI initiated Butterfly Network at Outperform with a $15 price target. Benzinga, Evercore ISI initiation · as of
Sources
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