EL PASO ? SEPTEMBER 11. Virgin Galactic, the privately-funded space company owned by Sir Richard Branson?s Virgin Group, landed its White Knight Two spaceship at the El Paso International Airport for refueling on its way to Spaceport America on September
The SPCE stock price has collapsed and is no longer finding any bids near its all-time low. Virgin Galactic shares are trading at $9.57, a few points above its record low of $6.77. This performance is mostly because of the rising cost of doing business, the hawkish Federal Reserve, and its long path towards profitability.
Virgin Galactic is a company that hopes to become a leading player in the space tourism industry. The firm designs and builds systems that will be useful in the industry, like spacecraft and other items. It describes itself as the world’s first commercial spaceline, and its services will include a 90-minute trip to the lower space known as Apogee. Each flight will have four passengers.
Virgin Galactic operates in a high-risk and challenging business. It takes years to build its products and start making money. The company was established in 2004 and is yet to generate its first real revenue. It is also a highly competitive industry, with companies like Blue Origin and SpaceX seeking to gain market share. Most importantly, it is a highly risky company, in which a single accident would lead to substantial losses.
All this explains why most analysts are pessimistic about the company. The most recent downgrade came from Morgan Stanley, which downgraded its target from $16 to 10. Cowen analysts expect that the SPCE stock price will continue struggling. Susquehanna, Trust, Bank of America, and UBS are other pessimistic analysts.
Still, this is not an indication that the stock will continue falling. For one, the company expects to start its spaceflights this year. Even though these flights will not be profitable, we could see the Virgin Galactic shares rebound if this goes well. Also, we have seen some previous meme stocks like AMC and GameStop rebound, meaning that SPCE could also follow suit.
Virgin Galactic has not been seeing any love in Wall Street lately. As most analysts turn bearish, the shares are moving sideways near their all-time low. As a result, the Smart Money Index has moved close to a record low. And a closer look shows that the stock has found a strong bottom at about $7.
Therefore, at this stage, the outlook of the shares is neutral, with the key parts to watch being the support at $7 and the resistance at $14.28. The latter was the lowest level in May 2021. In my opinion, the shares will likely retest that resistance and then resume the bearish trend.
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