Since January, Virgin Galactic (SPCE) has not engaged in the broader market. Shares are roughly unchanged in 2023 despite the fact that the S&P 500 index has risen 17%. Clearly, the company is still in the early stages of setting up its commercial program, where customers may buy tickets on upcoming flight missions. There is still a lot of work to be done!
The stock of Virgin Galactic Holdings recently closed at $2.79. It was down 2.11% from the day before and down 53.88% in one year. It underperformed comparable shares in the aerospace and military industries by 0.61 percentage points. The shares of Virgin Galactic Holdings are currently +6.49% above their 52-week low of $2.62 and -57.79% below their 52-week high of $6.61.
There are now 367.14 million SPCE shares outstanding. SPCE has a market capitalization of $1.02 billion. 10.1 million SPCE shares have been traded in the last 24 hours. Should investors consider the stock right now? Is it best to avoid it? The article below shows investors a clear path forward.
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The Stock of Virgin Galactic (NYSE: SPCE)
Virgin Galactic Holdings, Inc. is an aerospace conglomerate. It handles the development of human spaceflight for private individuals and researchers in the United States. It also develops air and space vehicles.
Sir Richard Branson founded Virgin Galactic with the goal of commercializing space travel. It provides clients with an exceptional spaceflight experience. Virgin Galactic is at the forefront of developing superior spaceships and services for space tourism and research. This is due to its breakthrough technologies and ambitious goals.
Virgin Galactic is based in Tustin, California, and operates on a global scale. The corporation specializes in human spaceflight vehicle design, manufacture, and operation. VSS Unity is their primary spacecraft. It is a suborbital spaceplane built to transport passengers and scientific payloads.
Virgin Galactic intends to offer unmatched access to space by putting an extra focus on safety, performance, and the customer experience.
The main offering of Virgin Galactic is its space tourism experience. In that, the clients can book a seat on the VSS Unity spacecraft for a suborbital journey. Virgin Galactic also works with academic institutions, governments, and corporate partners. This is to carry out research projects and gather data during its space missions. The business’s research services provide access to several fields of study.
How good is the company’s financial performance?
Some factors have driven the financial performance of Virgin Galactic. It includes the growth trajectory and the evolving nature of the space tourism sector. It is crucial to remember that Virgin Galactic is still in the early phases of its commercial operations. As space tourism gains strength over the next few years, revenue growth will likely pick up speed. In contrast to its competitors, the company still has low annual sales volumes.
It can be not easy to value a firm like Virgin Galactic. It’s due to the lack of well-established industry benchmarks and the volatile nature of the space tourism industry. Investors and space enthusiasts alike have been paying close attention to Virgin Galactic’s stock price movements.
Major price swings and variations in trading volume have been noted. This is in response to important announcements, test flights, and regulatory changes. News on operational achievements, new collaborations, and market developments might affect investor mood.
Virgin Galactic has many dangers and difficulties, much like any other emerging sector. The company’s growth track may be affected by market rivalry, technical advancements, and regulations. Additionally, consumer preferences and the state of the economy may have an impact on consumer demand for space tourism. These make it essential for Virgin Galactic to grow and adapt.
The business’s risk management techniques, continued investments in R&D, dedication to safety, and customer satisfaction all work to reduce these risks. Additionally, collaborations with well-known aerospace firms and partnerships with government organizations give Virgin Galactic access to important assets and expertise.
Virgin Galactic has issued a warning!
Virgin Galactic is currently affected by severe crosscurrents. On the one hand, the business of space tourism has finally started to take off. Yet its business strategy actually relies on a second-generation spacecraft that is still in the planning phases. Comparing Virgin Galactic’s financial statements to its projected earnings is the most effective approach to seeing the financial mismatch this will result in.
Virgin Galactic recorded revenue of over $1.9 million for the second quarter of 2023. Compared to the same quarter in 2022, when it brought in $357,000, that was a significant increase. This is due to the fact that the company has started operating frequent flights that take passengers and scientists into space. Without a doubt, it marks a significant turning point in the company’s history.
The long-term business model isn’t based on the spacecraft it is now utilizing. A second-generation spacecraft is now under development. The management hopes that it will result in a long-term profitable operation.
Given that the next class of ships won’t be built until 2024, spacecraft testing won’t begin until 2025. The first commercial flight won’t happen until 2026. This isn’t really a ringing endorsement of the current venture.
And this is the point at which investors’ warning bells should start to ring. The development of a spacecraft manufacturing factory and, afterward, spaceships is quite expensive. Virgin experienced a $134 million loss and a $135 million free cash flow deficit in the second quarter.
Even though a significant rise in revenue may appear positive, much more money still leaves the company than enters. Long-term viability is not possible with that.
More agony awaits investors
Avoid ignoring what management has to say about the company’s potential. The management considers that to be huge. Both the possibility and, most likely, sustainable earnings are still years away. The business will continue to spend money while constructing its second-generation rocket. In fact, management forecasts a negative cash flow of up to $260 million for the second half of 2023.
On the balance sheet of the business, cash and investments total about $980 million. By doing some quick calculations, Virgin Galactic has only a little bit less money than two years’ worth of funding at the expected burn rate. Without more funding, it won’t last till 2026.
In fact, the company issued 55 million shares of ordinary stock in the second quarter. This was to raise $241 million for the company. This allows time for management to build the new rocket! But each of those shares dilutes the current stockholders.
Virgin Galactic issued 5.8 million shares in the first quarter of 2023 to generate $32 million in cash. So, this wasn’t a one-time thing. Investors might expect even more stock sales in the future. This is due to the company’s ongoing liquidity needs.
This is typical because it often takes businesses a long time to build out their operations and start turning a profit. Virgin Galactic is still risky despite this, though.
There are two most significant causes of the stock’s dramatic 50% decline over the previous year. They are the high cash requirements and the lack of earnings. If you examine the financial figures and contrast them with the management’s remarks, the story becomes crystal clear.
Stock Forecast and Price Prediction for Virgin Galactic Holdings (SPCE)
It’s important to research Virgin Galactic Holdings stock before you buy. So that you can understand the risks and possible benefits after deciding where to buy it. The price of one share of Virgin Galactic Holdings stock on August 21, 2023, was $2.79. The price as of this writing is $2.74 (August 23, 2023).
By August 28, 2023, the value of Virgin Galactic Holdings shares will increase by 0.95% to $2.77 per share. It is based on the most recent SPCE stock projection. Many technical indications suggest that the present mood is bearish. However, the Fear and Greed Index currently reads 39 (fear).
The SPCE stock experienced 12.38% price volatility over the past 30 days and 12/30 (40%) green days. Given that SPCE stock is currently trading 0.94% below our projection, it would be wise to purchase it at this point.
Price history of Virgin Galactic Holdings:
It’s also essential to look at Virgin Galactic Holdings’ price history. This is to get a better picture of what might happen to the SPCE stock price in future periods. The SPCE/USD pair has lost -28.46% during the past month. SPCE/USD has a 1-year performance record of -55.45%. Virgin Galactic Holdings shares went -55.63% worse than Ethereum and -63.45% worse than Bitcoin over the past year.
|Jun 23, 2023||$ 4.73||$ 4.14||$ 4.43||$ 4.37||$ 62.97M|
|May 23, 2023||$ 4.99||$ 4.86||$ 5.05||$ 4.93||$ 15.96M|
|Mar 23, 2023||$ 3.91||$ 3.91||$ 4.06||$ 4.02||$ 8.28M|
|Feb 23, 2023||$ 5.81||$ 5.51||$ 5.75||$ 5.72||$ 8.20M|
|Jan 23, 2023||$ 5.29||$ 5.11||$ 5.26||$ 5.33||$ 9.24M|
|Dec 23, 2022||$ 3.58||$ 3.55||$ 3.73||$ 3.70||$ 5.10M|
|Nov 23, 2022||$ 5.01||$ 5.01||$ 5.11||$ 5.10||$ 3.11M|
|Sep 23, 2022||$ 4.98||$ 4.76||$ 4.88||$ 4.95||$ 5.65M|
|Aug 23, 2022||$ 6.13||$ 5.93||$ 6.08||$ 5.98||$ 6.69M|
|Jun 23, 2022||$ 6.22||$ 6.08||$ 6.30||$ 6.45||$ 5.93M|
|May 23, 2022||$ 6.60||$ 6.27||$ 6.50||$ 6.46||$ 6.80M|
|Mar 23, 2022||$ 9.62||$ 9.32||$ 9.59||$ 9.55||$ 9.25M|
|Feb 23, 2022||$ 7.95||$ 7.95||$ 8.53||$ 8.00||$ 56.99M|
|Dec 23, 2021||$ 14.53||$ 14.15||$ 14.41||$ 14.46||$ 5.49M|
|Aug 23, 2021||$ 24.53||$ 24.53||$ 25.16||$ 25.49||$ 10.40M|
|Sep 23, 2020||$ 16.44||$ 15.54||$ 16.12||$ 15.73||$ 9.97M|
|Jul 23, 2020||$ 26.13||$ 23.81||$ 25.68||$ 25.15||$ 39.29M|
|Aug 23, 2019||$ 10.38||$ 10.37||$ 10.38||$ 10.38||$ 238,010|
|Aug 23, 2018||$ 9.98||$ 9.95||$ 9.97||$ 10.00||$ 37,815|
The above table shows the share price history of Virgin Galactic Holdings’ price.
Future Price Predictions for Virgin Galactic Holdings’ Stock
The Virgin Galactic Holdings stock estimate for the start of the following year is $2.74. It’s based on the stock’s average annual growth over the last ten years. Here is the Virgin Galactic Holdings stock forecast until 2030 based on the same idea.
2025 Price Prediction for Virgin Galactic Holdings:
The Virgin Galactic Holdings stock forecast for 2025 is $2.73. It is calculated based on the belief that shares will increase at the same average annual rate as they have over the last ten years. The SPCE stock price would have increased by -0.18% as a result.
2030 price prediction for Virgin Galactic Holdings:
If Virgin Galactic Holdings keeps growing at its current 10-year average rate, its stock price will reach $2.72 in 2030. In 2030, if this Virgin Galactic Holdings stock forecast comes true, SPCE stock will decrease in value by -0.64% from its current price.
Checks on Virgin Galactic Holdings’s reliability
With WallStreetZen, novice investors may perform superior fundamental analysis in minutes as opposed to hours. Despite having weak fundamentals, Virgin Galactic Holdings is passing 8/33 due diligence procedures. It has a 25 Zen score overall. Here is a detailed analysis of the score:
- Valuation: SPCE scored a valuation score of 14. It is higher than the sector average for aerospace and defense. SPCE is passing one out of seven inspections for due diligence.
- Financials: SPCE has a financial score of 0. It is the same as the average for the aerospace and defense sector. Currently, SPCE is failing zero of the seven due diligence checks.
- Forecast: SPCE’s forecast score of 30 is higher than the average for the aerospace and military sectors. At the moment, SPCE is passing 3 of 9 diligence checks.
- Performance: SPCE has a performance score of 57. It is higher than the average for the aerospace and defense sectors. Currently, SPCE is able to pass 4 out of 10 diligence tests.
- Dividend: Virgin Galactic Holdings has no recent history of paying dividends. So, they do not assign a score to this feature.
Summary of SPC’s Financial Situation:
- The SPCE balance sheet reveals that short-term assets outnumber long-term liabilities.
- In comparison to shareholder equity, total SPCE debt is lower than it was five years ago.
- The cash burn for SPCE is 511480000. It has at least a year’s worth of coverage in the form of cash and short-term investments.
- On the SPCE balance sheet, short-term assets outnumber short-term liabilities.
- SPCE has a debt-to-equity ratio of 1.37, which is rather high.
- In the previous year, SPCE’s profit margin decreased from -9,801.1% to -15,135.2%.
- SPCE has cash and short-term investments of $979.95 million. This is insufficient to fund its $511.48 million annual cash burn.
Should investors buy, hold, or sell Virgin Galactic Holdings stock?
The average analyst rating on SPCE, which is based on five Wall Street analysts who follow the stock, is “hold.” Please be aware that analyst opinions and financial advice are not the same thing.
Most current SPCE analyst ratings:
- Kristine Liwag is a top 17% Morgan Stanley analyst. He reaffirms SPCE with an opinion of hold and maintains the price target from $4.00 to $4.00 on August 3, 2023.
- Alembic Global’s top 25% analyst is Peter Skibitski. He promotes SPCE to a hold rating and gives a $4.75 price target for SPCE on June 14, 2023.
- Noah Poponak is a Goldman Sachs bottom 18% analyst. He confirms SPCE with a hold recommendation and reduces their SPCE price target from $6.00 to $5.20 on May 15, 2023.
- Susquehanna’s Charles Minervino is a top 12% analyst. He retains a hold rating on SPCE and increases their price target from $3.00 to $3.75 on May 11, 2023.
- Wells Fargo’s Matthew Akers is a top 10% analyst. He retains a strong sell recommendation on SPCE and increases their price target from $2.50 to $3.00 on May 10, 2023.
SPCE performance figures
SPCE made $3.90 million in revenue last year. SPCE’s revenue has increased by 27.09% per year during the last five years. This was quicker than the 4.53% average for the aerospace and defense sectors.
Who buys and sells SPCE?
Over the last year, SPCE executives and major owners have sold more shares than they have purchased. Alistair Burns, SPCE’s SVP and Chief Information Officer, was the most recent SPCE insider to sell. On August 14, 2023, they sold $103.68 in SPCE shares.
Is SPCE a reliable source of income?
No, Virgin Galactic Holdings does not generate income through dividends.
Will the shares of Virgin Galactic Holdings hit $100?
To hit $100, Virgin Galactic Holdings stock would need to increase by 3,549.64%. According to the Virgin Galactic Holdings stock forecast, the stock price will not hit $100. Experts predict a maximum price of $24.62 by August 23, 2024.
Is Virgin Galactic Holdings a smart investment?
Virgin Galactic Holdings stock is now a solid stock to purchase, according to the Virgin Galactic Holdings stock forecast. This is due to the fact that the price of Virgin Galactic Holdings shares is predicted to rise by 263.64% over the next year.
Is it worth it for investors to wait?
Virgin Galactic plans to dominate the space tourism market. A ticket on one of the company’s aircraft missions costs around $450,000. Virgin Galactic transports a passenger vessel to a high altitude and then releases it. After that, the passenger ship fires a rocket burst to reach its maximum altitude before floating back to the Earth’s surface. It’s a suborbital journey with a brief duration of zero gravity.
After years of development and testing, the business has finally started executing commercial missions. In the second quarter of the current year, this generated almost $2 million in revenue. When compared to what is required to run the firm effectively, the revenue is just one drop in the bucket.
Still, it’s a significant step. A company will lose less money as volume increases. Just like that, Virgin Galactic will likely generate profits once the company completes enough flight missions to offset the fixed costs related to operating the company.
The difficult decision for investors is whether they should wait for that day. Investors may have to wait a bit, after all. Management projected only $2 million in revenue for the second half of the year. Meanwhile, cash losses will persist. Free cash flow for the third and fourth quarters is projected to be between minus $120 million and minus $130 million.
Virgin Galactic currently has $417 million in debt. It has issued new shares of stock on a regular basis to keep new money pouring in for the financing of the business. Although the business doesn’t mind, investors are continually being diluted. In other words, as new shares are issued, the value of their current shares decreases. When the company has completed its capital raising, how many shares will there be?
A typical mission activity will take years!
Sadly, the organization has a long way to go before conducting regular flying operations. Until more spacecraft can be created, tested, and added to the fleet, the present timeline calls for one mission to be completed almost every month. The next generation of the business’s spacecraft, the Delta Class, would include that.
Theoretically, it could handle weekly sorties and bring in close to $3 million in income per flight. Management has stated that this spacecraft won’t be marketed until 2026, provided there are no delays.
Thus, investors should either stay away from the stock or sell any shares they may already have because it has a $1.3 billion market cap while producing no revenue.
Investors ought to look for further expansion of the Delta fleet in the meantime. As well as greater clarity around the potential amount of dilution management may undertake. This is to support its operations over the coming years. After that, it might be smart to reconsider and take another look.
In an effort to energize staff members and potential investors, a company’s management team is bound to make sound decisions. That is especially true for a business that is essentially still in its early days. Yet, there are definite red flags at Virgin Galactic that investors need to pay attention to.
By 2026, perhaps the company will succeed in executing its long-term strategy and building a sustainable business. Yet, the company is currently losing money and burning up cash. It is also selling stock, despite a sharp decline in the share price, to help finance its huge capital investment plans. As a result, the risks currently appear to outweigh the benefits.