- Summary:
- Virgin Galactic's stock price is falling as the public offering will increase the number of outstanding shares, thus increasing the supply.
Virgin Galactic stock price fell heavily by 17.03% in Monday’s trading as of writing. Some may be wondering: why is the Virgin Galactic stock price falling after Sir Richard Branson conducted a successful space flight with an entire crew on the VSS Unity?
According to a statement by the company in which Richard Branson declared the company as the “vanguard of a new space age”, the test flight was a successful one. The company intends to cash in on the success while it is still hot. To this end, it will launch a $500 million stock offering. The stock offering, which will be offered to the public via Credit Suisse Securities, Goldman Sachs and Morgan Stanley, will raise the number of outstanding shares higher to 247.4 million.
The news of the stock offering has caused investors who got in early at prices less than $20 as of May 2021 to sell to take a profit. Now, prices are triple that level. Also, the rise in the number of outstanding shares will increase supply, producing a rebalancing that will decrease prices. This is why Virgin Galactic stock price is falling hard despite the success of the space flight.
Technical Levels to Watch
Monday’s candle shows a huge bearish bar, testing support at the premarket price of 39.90, just above the 39.80 resistance (1 March high). A breakdown of this support opens the door towards 35.04, with 32.08 and 26.53 serving as additional downside targets.
On the other hand, a bounce at the 39.80 support provides an opportunity for bulls to move prices up. An advance tests the 47.02 barrier (18 February low). If this level is uncapped, 52.02 automatically becomes the next target.
Virgin Galactic: Daily Chart
