This article takes an in-depth look at Virgin Galactic stock SPACE and asks: Is 2022 the year to buy SPCE shares?
Stock Name and Trading Stock Exchange Platform:
Virgin Galactic Holdings, Inc. – New York Stock Exchange (NYSE: SPCE)
The Stock Sector:
Virgin Galactic is a US-based aerospace and spaceflight company, that engages in the manufacturing of commercial space crafts with the goal of democratizing space travel to the masses.
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SPCE is also focused on the development of advanced air and space vehicles. It is also a researcher in exploring the space frontier.
The British Virgin group owns a 13.3% stake in the company. It has three operating bases namely; Spaceport America, Mojave air and Spaceport.
Virgin Galactic was founded in 2004 by the eccentric billionaire, Sir Richard Branson.
It kick started major operations in 2017, thereafter launching its first successful mission of the maiden spaceflight with the alias VSS Unity.
Virgin Galactic is headquartered in California, US.
Recent News on Virgin Galactic
The company has been moving wildly in the market in the past week, managing to both outperform the market and recently plunged downwards, underperforming the overall index.
Virgin Galactic is set to announce its earnings report next week on 05 May 2022. It has been on a rapid decline over the past few months, thus earnings are expected to be grim.
Its founder, Sir Richard Branson together with a crew of three other members, managed to successfully travel on the first private tour to space.
Branson has come out saying that he now looks forward to flying with rivals Space X, this has left many wondering if he has lost faith in SPCE.
Sir Richard Branson is known to be a man of controversy and this news comes as no surprise. The company is still at its infancy at the moment and very far from reaching its goals.
Virgin Galactic has announced a new entry to its executive team, Pilot, Kelly Latimer, who is part of the company’s flight team has been named the new director of flight testing.
Delays have stalled the company’s progress and they need to get the engineering completed before moving forward. SPCE is an exciting opportunity, but much work is needed to arrive at full capacity.
The company has so far not achieved its root goal of making space tourism viable. Key developments are happening, but there is need to rush to meet market expectations.
The SPCE company has promised to fly people to space by the end of 2022, but twists and turns still lie ahead, that might force them to rethink such optimism.
Chamath Palihapitiya, the SPAC king who assisted in taking Virgin public has stepped down from its board.
Current Position of Virgin Galactic
Virgin Galactic was doing well last year and has done well historically. It attracted much hype even before launching a single passenger into space.
The company has unique launch methods, which involves its mothership (white knight Two) taking off on a run way similar to conventional planes.
It carries a spacecraft in its belly which it ejects at a high enough altitude. The spaceship now launches via a rocket.
This method is cheaper and energy efficient, as compared to the routine vertical take-off done by other planes.
The crash of VSS Enterprise in 2014 killing a pilot and the other barley survived. This set back the company by several years. 3 people also died in 2007.
Experts have argued that the model of the company is flawed, as it targets a high-niche only client base. A ticket to space by the company was priced at $250,000, a small fortune.
The majority of the population, even well-off households cannot afford this novelty. They are far behind their projection to operate in full-swing by 2021.
Virgin has a fleet size of three different spacecraft models. It employs at least 823 employees. It closely works with the spaceship company (TSC) also founded by Richard Branson.
Suborbital spaceflights are Virgin’s sphere of prowess, with their Spaceship Two leading this space.
The period of Weightlessness is more efficiency for 16 kilometers. Its predecessor, Spaceship one was still pretty incredible, able to reach the Karman line boundary.
Space X has overshadowed the company in terms of achievement, launching exponentially more rockets and a better track record with big contractors.
Other main competitors exist for the company including Blue origin, owned by Billionaire Jeff Bezos and the defense aerospace king Boeing (NYSE: BA).
Space tourism could be the next revolution of the decade if achieved in the next decade.
Virgin could work with its rivals to make possible the colonization of mars (courtesy of Elon Musk) and delivering astronauts to the International Space Station.
The company went Public via a SPAC deal. Institutional ownership accounts for about 29.70% of the company with the likes of Blackrock & Vanguard Group as holders.
The sovereign wealth fund of Abu Dhabi, Abar inked a deal with the company in its early days (around 2010) purchasing a 31. l8% stake in the company for $280M.
Investors have since backed out of the company seeing no immediate plans of scalability.
Virgin took a massive hit due to the pandemic, approaching the brink of collapse. Richard Branson had to ask for a bailout from the government to keep it afloat.
The prospects for virgin are dimming each day, but there’s a glimmer of hope that they will breakthrough.
This is evidenced with the company signing a space agreement act with NASA, ensuring cooperative work on future high-speed transport systems.
Additionally, it has teamed up with Rolls Royce, to develop an aircraft capable of travelling about three times the speed of sound.
It will develop the engine propulsion technology required. Virgin still has a long way to go to accomplish these feats.
Virgin is trading at marginally low prices, severely plummeting in the past few months. As of the close of the market on 26 April 2022, the stock was at $7.79, down by -6.48%.
The company has had worse days this year when it fell to a record low of $6.75 in mid-March.
Just a year ago, the company was at its prime, soaring high ($60 in February) and getting media attention with its amazing launches.
They will say that the market has been rough with inflationary pressures and action by the federal reserve to taper the situation.
At the moment, the market is in correction with everything falling so virgin might rebound in the near term.
It is below its peak values and trading at a nominal range.
Sentiment on Virgin Galactic
While some investors think the company is dead, experts agree it is a boom and bust stock. It could be a potential winner if things go well in the sector.
However, it might not be a priority in a recession, unless it becomes a government contractor.
The aerospace company, Lockheed Martin performed well despite the market collapsing in the 2000’s due to this fact.
Arguments that the company is recession-proof is based on the thought that SPCE is independent from the equities market.
Huge sell-off has sent the stock to down spiralling, with insiders in the action, Virgin CEO, Michael Colglazier dumped millions of the stock.
This leads shareholders to question the worth of the company and grow sceptical of its future. In his defence, it is the top of a market bubble and the time to reap gains.
Profits for Virgin Galactic
Virgin is yet to attain profitability, as it is still has not tapped the set levels of forecasted income. The company has a relatively small market capitalization of $2B.
Revenue was recorded at $141K over the last year.
Net income went up by 22.40%, estimated at -$80.8M. The net profit margin was massively terrifying -57,302%, showing the company is burning a lot of capital on its operations.
Operating income went down by -9.64%, valued at -$81.28M. The net change decreased by -124.82%, coming in at -$170.61M.
Their cash and equivalents were at $524.48M, down by -21.24%. Virgin needs to fundamentally review its business model and find a way to generate income.
The next decade will be critical in evaluating the survival of the company.
Future of Virgin Galactic
Virgin Galactic is at a crucial juncture in its development. The way in which it manoeuvres could make or break Virgin Galactic.
The company needs to push major innovation and design its core engineering. Virgin Galactic is at crossroads and has been labelled a ‘lottery ticket’ by the mad money host, Jim Cramer.
Until then, we sit back and watch the reincarnation of the space race.
Overall Verdict on Virgin Galactic
Virgin Galactic stock SPCE: Is 2022 the year to buy SPCE shares?
Virgin is a stock to own as it is near rock bottom at the moment.
Its evolution in the long-term could determine its direction.
Will Virgin Galactic be around 20 years from now? It’s logically a 50/50 chance, in the event it does survive the next few years, now would be a good entry.
The financials for SPCE are ugly and a bit obscure at the moment.
Moving averages for SPCE indicate a strong sell and oscillators are neutral hence an overall strong sell.
The SPCE stock is bearish short-term and bullish in the medium-term. The SPCE stock is a potential strong buy given the discounted prices.
Virgin Galactic Stock Price Chart
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