Firefly Aerospace rallies after joining the Russell 2000 Index

Firefly Aerospace (FLY) rallied on Monday after the company officially joined the Russell 2000 Index as one of 18 new additions. Membership in the Russell 2000 Index also triggered the company’s addition to the broad-market Russell 3000 Index. The market capitalization-based indexes are part of FTSE Russell, a global index provider that offers a broad range of market indexes to measure the performance of different segments of the global financial markets.

The company has traded on the Nasdaq since its initial public offering on August 4. Firefly (FLY) priced its IPO at $45 per share and traded as high as $73.80 during its first week before beginning a slow decline to as low as $16.00 in November. 

Firefly Aerospace's (FLY) primary revenue stream comes from launching small-to-medium payloads to low Earth orbit on the Alpha rocket at a fee of roughly $15 million per launch. The Texas-based company is looking to fill a market gap for dedicated launches of payloads too large for small rockets but not economical for heavy-lift providers.

Morgan Stanley recently noted that it is cautious on Firefly Aerospace (FLY) until it gets its footing.

"We recognize that investors seeking space launch exposure have few public market alternatives, which has in part supported valuation for launch peer Rocket Lab (RKLB), which trades at ~20x EV/2027 sales. Given FLY's more limited successful launch track record (2 FLY missions vs. RKLB’s 70 missions) and more recent Alpha mishaps, we expect FLY – until it re-establishes its footing with Alpha – to trade at a steeper discount to RKLB and closer to space infrastructure and exploration peers, which trade in the ~2-2.5x EV 2027/sales range," highlighted analyst Kristine Liwag.

Shares of Firefly (FLY) were up 14.8% to $28.30 in afternoon trading.