BFLY · Butterfly Network, Inc.

The thesis

Butterfly Network's case rests on licensing its ultrasound-on-chip to outside device makers, its Embedded business, and the shares have fallen to $6.66 ahead of the report that tests it. The third-quarter results on 29 October 2026 decide whether revenue holds against management's 30 July 2026 guidance of $26–30 million for the quarter and $119–123 million for full-year 2026.

The 26 October 2026 close of $6.66 sits below the $7.00 weekly-close level that the previous note used as its invalidation level, and 32.9% under the $9.93 52-week high. The 14-day relative strength index (RSI), a momentum gauge where readings under 30 are called oversold, was 24.6 on the same date. The shares closed at $8.10 on 13 October 2026, so the decline came after the Bridge Neurotech agreement and the Canaccord Genuity initiation, not before them.

The narrative is maturing: coverage and partner announcements arrived steadily from 11 September to 12 October 2026, and the price has not followed them. The rating stays at low conviction because the third-quarter guide sits entirely below second-quarter revenue of $32.6 million and the newest partner agreements carry no disclosed value. Third-quarter revenue above $30 million with a raised full-year range would contradict that view.

Bullish and bearish views on Butterfly Network, Inc.

The bull case on Butterfly Network, Inc. (BFLY), in brief: Licensing lifted revenue and margin. The bear case: The guide allows a sequential revenue drop.

Bull case

• Licensing lifted revenue and margin. Second-quarter revenue was $32.6 million, up 39% from $23.4 million, and software and other services revenue rose to $16.9 million from $6.8 million (8-K, 30 July 2026). Gross margin was 71.4%, against 63.7% a year earlier.
• Losses narrowed in the second quarter. The adjusted EBITDA (earnings before interest, taxes, depreciation and amortisation) loss was $1.4 million, against $6.2 million a year earlier (8-K, 30 July 2026).
• The full-year guide went up. On 30 July 2026 management raised 2026 revenue guidance to $119–123 million, with an adjusted EBITDA loss of $19–23 million.
• The partner list keeps growing. Bridge Neurotech signed a multi-year Embedded licence with milestone payments on 6 October 2026, joining Mendaera, Midjourney Medical, Aleph Neuro and Merge Labs. Mendaera's FDA-cleared Focalist system became the first Embedded partner product on the market on 1 October 2026 (company release).
• Brokers' targets sit well above the price. TD Cowen reiterated Buy at $10 on 11 September 2026, Needham initiated at Buy with $10 on 22 September 2026, Evercore ISI initiated at Outperform with $15 on 29 September 2026, and Canaccord Genuity initiated at Buy with $10 on 12 October 2026 (Benzinga). Each target is above the $6.66 close of 26 October 2026.

Bear case

• The guide allows a sequential revenue drop. The $26–30 million third-quarter range from 30 July 2026 sits entirely below second-quarter revenue of $32.6 million, with an adjusted EBITDA loss of $6–9 million guided. Embedded revenue follows development work and contract milestones, so it moves in lumps between quarters.
• New deals carry no disclosed value. Neither the Mendaera launch on 1 October 2026 nor the Bridge Neurotech agreement on 6 October 2026 came with financial terms. Midjourney's agreement, up to $74 million over five years, remains the only Embedded deal with a disclosed value.
• Insider selling continues. MarketBeat counted insider sales of 4.75 million shares, worth about $32.3 million, over the 90 days to 30 September 2026. Two Rule 10b5-1 plans, the CEO's adopted 12 December 2025 and the founder's adopted 13 March 2026, allow scheduled sales at any price.
• Positive news has the price. The shares fell from $8.96 on 30 September 2026 to $8.10 on 13 October 2026 and $6.66 on 26 October 2026, through a period that included a new partner and a fourth broker initiation.

Price setup

The last adjusted close was $6.66 on 26 October 2026. The 52-week high is $9.93, and the shares are 32.9% below it. The 3-month price change is −6.2%, and RSI was 24.6.

The $7.00 level from the previous note, the late-June level the shares cleared after the 18 June 2026 Midjourney agreement, now lies above the price. A weekly close back above it would restore the earlier frame. A daily close below $6.00 would end the case as written here.

Crowding evidence is mixed. Insider sales under active 10b5-1 plans are the main supply that can be observed. The earnings report is two sessions away, which is the nearest event risk for a stock that fell this far into it.

Catalysts, next 30 days

• Through November: SEC Form 4 filings show whether sales under the active 10b5-1 plans continue after the report.

Elapsed catalysts

• 29 October 2026: third-quarter 2026 results, released with an 8:00 a.m. ET conference call. Earnings aggregators cite consensus revenue of about $28.4 million to $29.9 million, inside management's $26–30 million range. (passed 8d ago)
• 29 October 2026: Home & Community Care update, expected with the report. It shows whether the first commercial state started on 1 October 2026 as planned. (passed 8d ago)
• 29 October 2026: Embedded commentary on Mendaera and Bridge Neurotech. It shows whether the two newest partners contribute revenue in 2026–2027. (passed 8d ago)

What would change the view

The case breaks if third-quarter revenue comes in below $26 million, or if management cuts the $119–123 million 2026 revenue range on 29 October 2026. Either would show that Embedded revenue was lumpier than the second-quarter jump suggested.

A daily close below $6.00 would also end it. The case would strengthen on third-quarter revenue above $30 million with a raised full-year range, or on a second Embedded agreement with a disclosed dollar value. A weekly close back above $7.00 would show buyers returning.

What it trades with

Butterfly trades as a small-cap medical-technology name with a licensing story attached. Its price moved on broker initiations in September more than on company results. Its quarterly revenue depends on a few private partners, so a single milestone shifts the result. Moves in small-cap growth shares and medtech peers set the backdrop. The company's own report on 29 October 2026 is the dominant event.