Aeluma's Q2 Results Reinforce High Valuation and Execution Risks

What happened

Aeluma announced its second-quarter fiscal 2026 financial results for the period ended December 31, 2025, highlighting continued revenue growth but persistent operating losses. The company remains heavily dependent on U.S. government contracts, with minimal commercial sales, underscoring its unproven business model and high customer concentration. Despite a fortified balance sheet from recent equity raises, cash burn and management's guidance only assure operations for the next twelve months, signaling ongoing reliance on external capital. The results do little to justify the stock's premium valuation, trading at over 50 times trailing revenue with negative profitability and no scalable commercial traction. This reinforces the critical view that Aeluma's investment thesis hinges on speculative commercialization rather than current fundamentals.

Implication

The persistent dependence on government contracts increases vulnerability to budget cuts and program delays, exposing investors to revenue volatility. Ongoing operating losses and cash burn elevate the risk of future equity dilutions, which could erode per-share value and depress stock prices. Without visible commercial design-wins, the company's technology has not gained market acceptance, challenging the growth narrative and justifying skepticism. At current valuation multiples, the stock offers poor risk-reward, with downside protection limited by cash but upside contingent on unproven commercialization milestones. Investors should adhere to DeepValue guidance, considering trimming positions above $24 and seeking entry near $11 for a better margin of safety.

Thesis delta

The Q2 financials confirm the DeepValue thesis that Aeluma's valuation is disconnected from its fundamentals, with no material shift in commercial diversification or profitability. This reinforces the 'POTENTIAL SELL' rating and underscores that the stock remains overvalued, requiring tangible progress in revenue mix and cost management to alter the bearish outlook.