BFLY
Butterfly Network, Inc.NYSEValuation snapshot
Above bull casePrice is above even the bull case.
Price as of Sep 4, 2026 · Valuation Aug 13, 2026
What drives BFLY's base case?
base-case thesisButterfly's revenue grew from about $98 million in 2025 to a guided $119–123 million this year, and its most recent quarter set a record at $32.6 million with the highest-ever margin on each dollar of sales at 71%. Two things drive that: its handheld scanners are selling more units to hospitals and medical schools, and a new licensing business now has 11 partners paying for development work, hardware, and eventually chips. This scenario assumes that partner business settles into the steady quarterly pace management described rather than repeating the one-off spike, so growth cools from the high teens toward roughly ten percent by year five. Because the company keeps most of every sales dollar as gross profit and its costs grow more slowly than revenue, it crosses from losing money into solid profitability partway through the forecast.
What shapes the assumptions
Raised full-year revenue guidance
FY2026 guidance of $119–123M versus $97.6M in FY2025
Raises revenue growth
Recurring Embedded partner cadence across 11 partners
Embedded revenue of $10.8M in Q2, guided to a $7–8M quarterly run rate
Raises revenue growth
Mix shift toward high-margin licensing and software
Gross margin 71%, up 770bps YoY; software/services 51.8% of revenue
Raises operating margin
Fabless, standardized chip platform reused across partners
Capital intensity implied by $124.7M cash and asset-light structure
Lowers reinvestment
Years of accumulated losses shelter early profits
Operating margin negative in all eight reported quarters
Lowers tax rate
Each driver links a business metric to the forecast assumption it shapes — the basis for this case, not investment advice.
Why the gap?
No revenue growth rate in a sensible range reproduces today's price — the market appears to be valuing something this model does not capture.
What else could explain it?›
- How much of this is timing?
- The price has fallen 22.9% since this valuation was struck on 2026-08-13, so some of the gap opened up after these figures were set.
- How confident is this estimate?
- Robustness 37.0/10 (Fragile) — some of any gap is our own uncertainty rather than disagreement.
- What would change the answer?
- Which assumption this valuation swings on, and by how much.
- Share count is still growing
- Diluted shares grew 5.5% year on year. This valuation uses today's share count, not tomorrow's — continued dilution would spread the same value across more shares.
Many combinations of assumptions reproduce the same price. These are ways to read what the market might be expecting, not the market's actual view. How this is worked out
Research & assumptions
Inspect the valuation thesis, cases, risks, evidence, and model inputs.
View details
Research & assumptions
Inspect the valuation thesis, cases, risks, evidence, and model inputs.
Three independently researched cases generated automatically from published financials. Every assumption is justified and cited; the discount rate is computed from researched market inputs.
Base inputs from financials
source period →Base revenue (TTM)
$112.1M
Diluted shares
262,100,993
Net cash
—
Bear
low confidence$0.01
IV / share
-99.8% vs $7.29
- Explicit cash flows
- $0.01
- Terminal value
- $0.01
- Net cash
- $0.00
- Intrinsic value / share
- $0.01
57.9% of the value rests on the terminal value — elevated dependency.
bear operating margin (2%) sits well above the best recent margin (-42%)
Revenue growth8.0% → 3.0% → 4.0% → 5.0% → 5.0%medium
How derived: Starting from the fact that management guides FY2026 to $119–123M but Q3 to only $26–30M — a sequential step down from Q2's record $32.6M — I treat the 39% YoY jump as milestone/NRE-driven rather than run-rate, so once the Midjourney co-development milestones (a capped $74M five-year contract with a $15M upfront) are recognized, growth collapses toward the roughly flat product-revenue trend and the low-single digits, echoing the -10.2% revenue decline the company already posted in 2023.
Why this confidence: Company-issued FY2026 and Q3 revenue guidance anchors year one ↑, Embedded revenue is milestone/NRE-based and inherently lumpy, making years 2-5 hard to phase ↓, Five-year horizon on a company with only six years of revenue history ↓, Prior-year precedent of an actual revenue decline (2023) supports the downside shape ↑
No tracked driver measures this assumption yet.
Evidence for
- Management guided Q3 2026 revenue to $26–30M, below the $32.6M just reported, indicating the Q2 record was lumpy milestone revenue rather than a durable run rate.[Butterfly (BFLY) Q2 2026 Earnings Call Transcript]· primary
- The Midjourney agreement is capped at up to $74 million over a five-year term, so it is a finite contribution, not a compounding revenue stream, until Apollo chip volumes begin.[Butterfly Network commentary on Midjourney scanner announcement]· primary
- Average selling price fell about 12% year over year on iQ+ mix and the VCOM deal, showing price pressure in the core device business.[BFLY Q2 2026 earnings call transcript]· primary
- Revenue actually shrank 10.2% in 2023, demonstrating the business has already gone backwards once in the recent past.[BFLY reported annual revenue history (company filings)]· primary
Evidence against
- Management raised FY2026 revenue guidance to $119–123M from an initial $117–121M, an upward not downward revision.[Butterfly Network targets $117M–$121M revenue in 2026]· secondary
- Butterfly now has 11 Embedded partners and expects a recurring cadence of roughly $7–8M per quarter, which argues against Embedded revenue falling to zero.[BFLY Q2 2026 earnings call transcript]· primary
Operating margin2.0%medium
How derived: Trailing-twelve-month operating margin is roughly -71% and the best quarter ever printed is Q2 FY2026 at -41.9%, and even that quarter's near-breakeven adjusted EBITDA loss of $1.4M excludes heavy stock-based compensation, so in a low-growth world where revenue stalls near $130M I assume the company only just crosses into positive reported operating profit and stays there — a barely-profitable outcome rather than the deep losses of today.
Why this confidence: Four quarters of directly reported operating margins provide a clear trend line ↑, No history of any positive operating quarter, so the level of a sustainable margin is unobserved ↓, Stock-based compensation gap between adjusted EBITDA and reported operating income is large and volatile ↓
No tracked driver measures this assumption yet.
Evidence for
- Butterfly guided FY2026 to an adjusted EBITDA loss of $19–23M, wider than the H1 pace, because management is deliberately increasing investment in the core and Embedded businesses.[BFLY Q2 2026 8-K Exhibit 99.1]· primary
- The company has never reported a positive operating margin in any quarter shown, with Q3 FY2025 as bad as -163%.[BFLY quarterly results (company filings)]· primary
Evidence against
- Gross margin hit an all-time high of 71%, up 770 basis points year over year, so the contribution economics to fund operating profit are improving fast.[BFLY Q2 2026 earnings call transcript]· primary
- Adjusted EBITDA loss narrowed 78% year over year to $1.4M in Q2 FY2026, a much faster improvement than revenue growth alone would deliver.[BFLY Q2 2026 8-K Exhibit 99.1]· primary
Tax rate25.0%high
How derived: The starting fact is the 21% US federal statutory corporate rate; because in this scenario Butterfly generates so little taxable income that its accumulated loss carryforwards deliver almost no present-value shield and could be constrained or expire unused, I apply the full 21% plus roughly 4 points of blended state tax as the long-run marginal rate.
Why this confidence: Statutory federal rate is a published, unambiguous legal figure ↑, State apportionment for a Connecticut/California-footprint company is an estimate ↓, Rate is a policy variable that could change over a five-year-plus horizon ↓
No tracked driver measures this assumption yet.
Evidence for
- The US federal corporate income tax rate is a flat 21%, to which state income taxes are additive.[26 U.S. Code §11 - Tax imposed]· primary
- Butterfly remains loss-making at the operating line, so it currently records essentially no income tax expense and derives no near-term benefit from its deferred tax assets.[BFLY Q2 2026 Form 10-Q]· primary
Evidence against
- Butterfly carries very large accumulated deficits from years of losses, which would shelter early taxable income if the company ever turns profitable and could push the effective cash rate below statutory for several years.[BFLY Q2 2026 Form 10-Q (stockholders' equity / accumulated deficit)]· primary
Reinvestment rate80.0%low
How derived: Butterfly is mid-way through developing the Apollo semiconductor platform, which management says will not deliver to Midjourney until late 2027 or early 2028, so the base fact is that heavy R&D must be funded years before any associated revenue; in a bear world with only 2% operating margin, nearly all of the small after-tax profit must be plowed back into chip and software development just to hold share, leaving little free cash.
Why this confidence: Company does not disclose a reinvestment or sales-to-capital target, so this is inferred ↓, Ratio is measured against a near-zero profit base, making it mechanically unstable ↓, Disclosed Apollo development timeline confirms the direction of heavy pre-revenue spend ↑
No tracked driver measures this assumption yet.
Evidence for
- Management explicitly said updated FY2026 adjusted EBITDA guidance reflects increased investment to support innovation in both the core and Embedded businesses.[BFLY Q2 2026 8-K Exhibit 99.1]· primary
- The Apollo chip is on schedule for delivery to Midjourney only in late 2027 or early 2028, meaning multiple years of development spending precede the revenue.[BFLY Q2 2026 earnings call transcript]· primary
Evidence against
- Management describes a standardized semiconductor platform reused across partners rather than custom chips per client, which limits incremental development cost per new partner.[BFLY Q2 2026 earnings call transcript]· primary
- Butterfly is fabless and asset-light with a 71% gross margin, so capital expenditure needs are modest relative to a traditional device manufacturer.[BFLY Q2 2026 Form 10-Q]· primary
Terminal growth2.0%high
How derived: The base fact is that no mature company can outgrow the economy forever and the 4.68% 10-year Treasury yield sets the ceiling; in the bear case where Butterfly ends up a niche handheld-probe vendor facing 12% average selling price erosion, I hold terminal growth at 2%, roughly long-run inflation and below real US GDP growth.
Why this confidence: Bounded above by an observable, published risk-free rate ↑, Standard macro anchor rather than a company-specific judgment ↑, Perpetuity assumption is unverifiable by nature ↓
No tracked driver measures this assumption yet.
Evidence for
- The 10-year Treasury yield was about 4.68% on August 12, 2026, so a 2% perpetual growth rate is comfortably below the risk-free ceiling.[Federal Reserve H.15 Selected Interest Rates (Daily)]· primary
- Average selling prices declined about 12% year over year in Q2 FY2026, consistent with a commoditizing hardware category that grows only with inflation over time.[BFLY Q2 2026 earnings call transcript]· primary
Evidence against
- Point-of-care ultrasound penetration remains low and Butterfly's Compass AI pipeline grew five-fold year over year, suggesting a category still expanding faster than the economy.[BFLY Q2 2026 earnings call transcript]· primary
Base
low confidence$0.32
IV / share
-95.6% vs $7.29
- Explicit cash flows
- $0.12
- Terminal value
- $0.20
- Net cash
- $0.00
- Intrinsic value / share
- $0.32
63.1% of the value rests on the terminal value — elevated dependency.
base operating margin (14%) sits well above the best recent margin (-42%)
Revenue growth18.0% → 16.0% → 14.0% → 12.0% → 10.0%medium
How derived: Starting from management's raised FY2026 guidance of $119–123M — about 24% above FY2025's $97.6M — I step growth down to 18% and then gradually toward 10%, because the ~$7–8M quarterly Embedded cadence management describes plus 11 signed partners should keep compounding, but the initial Midjourney milestone burst does not repeat and the core probe business is growing at only a high-single-digit to low-teens rate.
Why this confidence: Year one is anchored to company-issued full-year revenue guidance ↑, Management gave an explicit quarterly Embedded run-rate range to build from ↑, Growth history is highly volatile (+82%, +17%, -10%, +25%, +19%) ↓, Years 3-5 depend on partner commercialization timing outside management's control ↓
No tracked driver measures this assumption yet.
Evidence for
- Management raised FY2026 revenue guidance to $119–123 million, implying roughly 22–26% growth over FY2025's $97.6 million.[BFLY Q2 2026 8-K Exhibit 99.1]· primary
- Butterfly counts 11 Embedded partners and expects a recurring cadence of roughly $7–8 million per quarter, with upside as more partners commercialize.[BFLY Q2 2026 earnings call transcript]· primary
- Unit sales of iQ3 and iQ+ rose 17% and 33% year over year respectively, showing the core device business is still expanding in volume.[BFLY Q2 2026 earnings call transcript]· primary
Evidence against
- Q3 FY2026 guidance of $26–30 million is below the $32.6 million just reported, showing the growth path is not smooth and can go backwards sequentially.[BFLY Q2 2026 earnings call transcript]· primary
- Revenue fell 10.2% in 2023 and grew only 4.5% in Q3 FY2025, so Butterfly's growth has repeatedly stalled in the past.[BFLY reported results (company filings)]· primary
Operating margin14.0%medium
How derived: The base fact is that Q2 FY2026 gross margin hit an all-time high of 71% while adjusted EBITDA loss narrowed to just $1.4M on $32.6M of revenue; extending that operating leverage to a business roughly twice today's size, with operating expenses growing well below revenue, supports a mid-teens reported operating margin once the sizable stock-based compensation excluded from adjusted EBITDA is charged back in.
Why this confidence: Four consecutive quarters of improving gross and operating margin establish a clear direction ↑, Management-guided adjusted EBITDA range bounds near-term profitability ↑, Gap between adjusted EBITDA and reported operating income (stock compensation) is large ↓, No historical positive-margin quarter to calibrate the steady-state level ↓
No tracked driver measures this assumption yet.
Evidence for
- Gross margin reached an all-time high of 71% in Q2 FY2026, up 770 basis points year over year on a mix shift toward higher-margin Embedded revenue.[BFLY Q2 2026 earnings call transcript]· primary
- Adjusted EBITDA loss narrowed 78% year over year to $1.4 million, and reported operating margin improved from -68.9% to -41.9% over the same four quarters.[BFLY Q2 2026 8-K Exhibit 99.1]· primary
Evidence against
- FY2026 adjusted EBITDA guidance of a $19–23 million loss implies materially wider losses in the second half as management deliberately re-invests, so the margin path is not linear.[BFLY Q2 2026 8-K Exhibit 99.1]· primary
- Reported operating margin was still -41.9% in the best quarter on record, meaning a mid-teens positive margin requires roughly 56 points of improvement.[BFLY Q2 2026 Form 10-Q]· primary
Tax rate23.0%high
How derived: Starting from the 21% federal statutory rate plus roughly 4 points of blended state tax, I shade the long-run rate down to 23% because Butterfly's accumulated losses from years of negative operating income shelter a portion of early profits before the rate converges toward the full marginal rate.
Why this confidence: Anchored to a published statutory rate ↑, Loss-carryforward offset is an estimate of timing, not a disclosed schedule ↓, State apportionment mix is approximated ↓
No tracked driver measures this assumption yet.
Evidence for
- The US federal corporate rate is a flat 21% under IRC §11, with state income taxes additive on top.[26 U.S. Code §11 - Tax imposed]· primary
- Butterfly has been loss-making every quarter shown, generating loss carryforwards that reduce cash taxes in the first profitable years.[BFLY Q2 2026 Form 10-Q]· primary
Evidence against
- Federal net operating loss usage is limited to 80% of taxable income annually, so carryforwards cannot fully eliminate the tax bill even in profitable years.[26 U.S. Code §172 - Net operating loss deduction]· primary
Reinvestment rate50.0%low
How derived: Starting from the fact that Butterfly is fabless and asset-light with a 71% gross margin and modest capital spending, but is simultaneously funding the Apollo chip platform and AI software ahead of 2027-28 shipments, I assume about half of after-tax operating profit is reinvested — enough to support low-to-mid-teens revenue growth on a standardized chip platform that management says is reused across partners rather than rebuilt per client.
Why this confidence: No disclosed capital-intensity or sales-to-capital target from the company ↓, Fabless, software-weighted mix is directly observable in the 71% gross margin ↑, Semiconductor development costs are lumpy and hard to phase over five years ↓
No tracked driver measures this assumption yet.
Evidence for
- Management says the Embedded business uses a standardized semiconductor platform rather than custom chips per client, so incremental partners require limited additional development spend.[BFLY Q2 2026 earnings call transcript]· primary
- Butterfly holds $124.7 million of cash and $189.4 million of stockholders' equity with no disclosed borrowings, so growth can be funded internally without heavy external capital.[BFLY Q2 2026 Form 10-Q]· primary
Evidence against
- Management explicitly widened its FY2026 adjusted EBITDA loss guidance to fund increased investment in innovation across the core and Embedded businesses.[BFLY Q2 2026 8-K Exhibit 99.1]· primary
- Butterfly plans to launch new hardware and two new AI applications by early 2027, indicating sustained rather than declining development spend.[BFLY Q2 2026 earnings call transcript]· primary
Terminal growth2.8%high
How derived: Starting from long-run nominal US GDP growth of roughly 4% and the 4.68% 10-year Treasury ceiling, I set terminal growth modestly below the economy at 2.8%, reflecting that a mature Butterfly should still benefit from steady point-of-care ultrasound adoption but will face hardware price erosion of the kind already visible in its 12% average-selling-price decline.
Why this confidence: Bounded by an observable published risk-free rate ↑, Macro anchor rather than a company-specific forecast ↑, Perpetuity by definition cannot be verified ↓
No tracked driver measures this assumption yet.
Evidence for
- The 10-year Treasury yield stood at roughly 4.68% on August 12, 2026, comfortably above the assumed perpetual growth rate.[Federal Reserve H.15 Selected Interest Rates (Daily)]· primary
- Butterfly's recurring software and services revenue was 51.8% of Q2 FY2026 revenue, a mix that supports inflation-plus pricing power in the long run.[BFLY Q2 2026 Form 10-Q]· primary
Evidence against
- Average selling prices fell about 12% year over year, evidence that hardware price deflation can hold long-run growth below the economy.[BFLY Q2 2026 earnings call transcript]· primary
Bull
low confidence$1.25
IV / share
-82.8% vs $7.29
- Explicit cash flows
- $0.40
- Terminal value
- $0.85
- Net cash
- $0.00
- Intrinsic value / share
- $1.25
67.8% of the value rests on the terminal value — elevated dependency.
bull revenue growth (avg 24%) runs well above the trailing 1% trend
bull operating margin (26%) sits well above the best recent margin (-42%)
Revenue growth30.0% → 28.0% → 25.0% → 20.0% → 16.0%low
How derived: Starting from the actual 39% year-over-year growth in Q2 FY2026 and 439% growth in Embedded revenue, I assume the platform inflects rather than normalizes: management says there is no practical limit to partner count because the semiconductor platform is standardized, Apollo chips ship to Midjourney in late 2027/early 2028, and partners transition from development fees to high-volume chip purchases — the 'big pops' management describes — so growth stays near 30% before decaying as the base gets large.
Why this confidence: Depends on chip volume revenue that has not yet been booked and starts beyond the guidance window ↓, Management commentary on partner count and chip-sharing economics is qualitative, not quantified ↓, Actual 439% Embedded growth and 39% total growth are reported facts supporting the direction ↑, Near-term guidance (Q3 below Q2) contradicts the assumed smooth acceleration ↓
No tracked driver measures this assumption yet.
Evidence for
- Embedded revenue grew 439% year over year to $10.8 million in Q2 FY2026 and total revenue grew 39%, the fastest growth since 2021.[BFLY Q2 2026 8-K Exhibit 99.1]· primary
- Management says there is no practical limit to the number of Embedded partnerships because a standardized semiconductor platform is used rather than custom chips per client, and expects 'big pops' when partners move to full commercialization and chip-sharing models.[BFLY Q2 2026 earnings call transcript]· primary
- The Compass AI sales pipeline increased five-fold year over year and unit sales of iQ3 and iQ+ rose 17% and 33%, showing the core business is also accelerating.[BFLY Q2 2026 earnings call transcript]· primary
Evidence against
- Q3 FY2026 revenue is guided to $26–30 million, a sequential decline from Q2's $32.6 million, so a straight-line 30% path is not what the near-term guidance implies.[BFLY Q2 2026 earnings call transcript]· primary
- Apollo chip deliveries to Midjourney are only scheduled for late 2027 or early 2028, so high-volume chip revenue is at least 18 months away and subject to execution risk.[BFLY Q2 2026 earnings call transcript]· primary
- Revenue declined 10.2% in 2023, showing that Butterfly's growth has previously reversed rather than compounded.[BFLY reported annual results (company filings)]· primary
Operating margin26.0%low
How derived: Starting from the reported 71% all-time-high gross margin and management's description of the Embedded business evolving from a 'job shop' into a scalable software and chip-licensing platform, I assume revenue mix keeps shifting toward license fees and chip royalties that carry near-software economics, letting a roughly $270M-revenue Butterfly hold operating costs well below revenue growth and reach a mid-twenties operating margin typical of scaled semiconductor-IP and medical-software businesses.
Why this confidence: No quarter in the company's history has shown a positive operating margin ↓, Gross margin of 71% is a reported hard ceiling-setter that makes a mid-20s margin arithmetically achievable ↑, Large stock-based compensation excluded from adjusted EBITDA weighs on reported margins ↓, Assumed mix shift to chip royalties has not yet been demonstrated in reported revenue ↓
No tracked driver measures this assumption yet.
Evidence for
- Gross margin reached an all-time high of 71% in Q2 FY2026, up 770 basis points year over year on the mix shift toward Embedded.[BFLY Q2 2026 earnings call transcript]· primary
- Software and other services reached 51.8% of Q2 FY2026 revenue at $16.9 million, nearly tripling year over year.[BFLY Q2 2026 Form 10-Q]· primary
- Adjusted EBITDA loss narrowed 78% year over year to $1.4 million, demonstrating steep operating leverage on incremental revenue.[BFLY Q2 2026 8-K Exhibit 99.1]· primary
Evidence against
- FY2026 adjusted EBITDA is guided to a $19–23 million loss with management explicitly increasing investment, so operating expenses are still rising, not being harvested.[BFLY Q2 2026 8-K Exhibit 99.1]· primary
- Reported operating margin was still -41.9% in Q2 FY2026, so a 26% margin requires roughly 68 points of improvement with no historical precedent at the company.[BFLY Q2 2026 Form 10-Q]· primary
Tax rate21.0%medium
How derived: Starting from the 21% federal statutory rate, I hold the long-run effective rate at that level rather than adding state tax because a rapidly profitable Butterfly would apply large accumulated loss carryforwards, R&D credits from its ongoing chip and AI development, and a growing share of foreign-source licensing income, offsetting the state component.
Why this confidence: Federal statutory rate is a published legal figure ↑, Assumed offset of state tax by credits and foreign mix is a judgment, not disclosed ↓, Tax law could change materially over the forecast horizon ↓
No tracked driver measures this assumption yet.
Evidence for
- The US federal corporate income tax rate is a flat 21%.[26 U.S. Code §11 - Tax imposed]· primary
- The research credit under IRC §41 directly reduces tax liability for qualifying development spend, which is substantial given Butterfly's Apollo chip and AI programs.[26 U.S. Code §41 - Credit for increasing research activities]· primary
Evidence against
- Federal loss carryforwards can offset only 80% of taxable income in a given year, and state income taxes are additive, so a sustained 21% all-in rate is optimistic.[26 U.S. Code §172 - Net operating loss deduction]· primary
Reinvestment rate32.0%low
How derived: Starting from the fact that Butterfly is fabless with 71% gross margins, no disclosed debt and $124.7M of cash, and that management says one standardized semiconductor platform serves all partners rather than custom silicon per client, I assume only about a third of after-tax operating profit is reinvested — high returns on incremental capital mean rapid growth can be financed with relatively little capital once the Apollo platform's up-front design cost is behind the company.
Why this confidence: Company discloses no reinvestment or return-on-capital target ↓, Asset-light fabless structure is directly evidenced by the balance sheet and 71% gross margin ↑, Assumes chip development costs fall away, which management commentary does not confirm ↓
No tracked driver measures this assumption yet.
Evidence for
- Management has completed the primary design of the Apollo chip platform and moved into development, meaning the largest design outlay is already partly sunk.[BFLY Q2 2026 earnings call transcript]· primary
- The Embedded model uses a standardized semiconductor platform across all partners rather than custom chips, so adding partners requires little incremental capital.[BFLY Q2 2026 earnings call transcript]· primary
- Butterfly held $124.7 million in cash with $189.4 million of stockholders' equity and no disclosed borrowings at June 30, 2026.[BFLY Q2 2026 Form 10-Q]· primary
Evidence against
- Management widened FY2026 adjusted EBITDA loss guidance specifically to fund increased investment in core and Embedded innovation, and plans new hardware plus two AI applications by early 2027.[BFLY Q2 2026 8-K Exhibit 99.1]· primary
- Scaling to high-volume chip shipments to partners will require working capital and inventory investment that a licensing-only model would not.[Butterfly Ultrasound-on-Chip powers Midjourney body scanner]· primary
Terminal growth3.5%medium
How derived: Starting from the roughly 4.68% 10-year Treasury yield as the absolute ceiling on any perpetual growth rate, I use 3.5% — close to but below long-run nominal GDP — on the reasoning that a Butterfly embedded as the standard ultrasound chip inside many third-party devices, with software already 51.8% of revenue, retains modest pricing power and category expansion beyond the forecast window.
Why this confidence: Bounded by an observable, published risk-free rate ↑, Set at the upper end of a defensible range, so more sensitive to error than the base case ↓, Perpetuity assumptions cannot be verified against evidence ↓
No tracked driver measures this assumption yet.
Evidence for
- The 10-year Treasury yield was about 4.68% on August 12, 2026, so 3.5% remains below the risk-free ceiling.[Federal Reserve H.15 Selected Interest Rates (Daily)]· primary
- Software and other services already make up 51.8% of revenue at $16.9 million per quarter, a recurring base that typically sustains inflation-plus growth.[BFLY Q2 2026 Form 10-Q]· primary
Evidence against
- Average selling prices fell about 12% year over year, showing that hardware deflation is a real long-run drag on the revenue base.[BFLY Q2 2026 earnings call transcript]· primary
Valuation robustness
reliability of the estimate, not a stock rating37 / 100 · Fragile
Formula v1.0.0. Higher means a more reliable estimate — not a recommendation.
Quality checks
Automated model-risk flags — warnings, not recommendations.
- The bear-to-bull range spans 386% of the base value — the outcome is highly uncertain.→ scenarios
- The reinvestment assumption is low-confidence.→ reinvestment
- Diluted share count grew 6% year over year, which reduces per-share participation in business growth.→ per-share economics
Per-share economics
Business growth after changes in the diluted share count.
| Period | Revenue growth | FCF/share | FCF/share growth | Shares | Share growth |
|---|---|---|---|---|---|
| Q1 2025 | 20.2% | -0.05 | 50.9% | 234.92M | 12.5% |
| Q2 2025 | 8.8% | -0.03 | 36.0% | 248.39M | 17.4% |
| Q3 2025 | 4.5% | -0.02 | 60.5% | 252.09M | 18.5% |
| Q4 2025 | 41.0% | 4.13 | 167.0% | 1.93M | 236.2% |
| Q1 2026 | 25.0% | -0.06 | -13.0% | 256.52M | 9.2% |
| Q2 2026 | 39.5% | -0.07 | -102.7% | 262.1M | 5.5% |
Valuation history every run
Why intrinsic value changed
Why
No sourced event is linked to this change yet — the researched assumption moved without a cited driver observation behind it.
Why
No sourced event is linked to this change yet — the researched assumption moved without a cited driver observation behind it.
Why
No sourced event is linked to this change yet — the researched assumption moved without a cited driver observation behind it.
Sequential deterministic bridge · order-dependent contributions · exactly reconciled
Market inputs researched
The 10-year US Treasury constant-maturity yield published in the Federal Reserve's H.15 release was approximately 4.68% on August 12, 2026, and I use the 10-year point because it best matches the duration of the forecast cash flows.
The reported levered beta for Butterfly Network is 2.28, reflecting an unprofitable small-cap medical device company whose shares have moved far more than the market, and I use it as-is because the company has no disclosed debt so the levered and unlevered betas are effectively the same.
Damodaran's forward-looking implied equity risk premium for the US market at the start of 2026 was 4.23% over the Treasury bond rate, and I use this market-implied figure rather than a historical average because it is backed out from current prices and expected cash flows.
Butterfly Network's Class A shares traded at approximately $9.70 on August 10, 2026, near a 52-week high of $9.74, giving a market capitalization of roughly $2.5 billion on about 262 million diluted shares.
Butterfly reports no borrowings, so I build a synthetic pre-tax cost of debt from the 4.68% 10-year Treasury plus roughly a 5.3-point default spread — Damodaran's synthetic-rating table assigns a deep speculative-grade spread to firms with negative interest coverage, which I temper toward the B range because Butterfly carries $124.7M of cash and $189.4M of equity with zero debt.
Generated 8/13/2026, 10:50:25 AM · pipeline v1.1.0