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Headquarters in New Mexico Galactic Virgo (NYSE:SPCE) was founded by billionaire Richard Branson with the goal of bringing people into space who aren’t necessarily professional astronauts. It is an intriguing business model, which you will need to believe in if you plan to own SPCE shares for the long term.
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So far, it hasn’t been that easy for Virgin Galactic to capitalize on its massive business. The company may have been one of the earliest competitors in the space tourism market, but its competition is growing rapidly.
Meanwhile, Virgin Galactic has experienced frustrating flight delays. Probably tired of these setbacks, UBS analyst Myles Walton went so far as to lower SPCE stock from “hold” to “sell” while drastically reducing its target price from $ 26 to $ 15.
Walton’s call was perfect, as SPCE stock just dropped to $ 15. It might sound like a good deal, but if Virgin Galactic doesn’t deliver positive updates soon, there will be no fuel left for shareholders.
A closer look at the SPCE action
From a technical point of view, it could be justified to hold SPCE shares.
In May, the stock fell to $ 15 and then rebounded rapidly. As of December 23, the Virgin Galactic share price was somewhat close to $ 15, so the market may give it some support.
The problem with support levels, however, is that they don’t guarantee a bounce. Time and time again, stocks have fallen below these levels as more investors simply give up and look to better opportunities.
If you choose to “buy down” SPCE shares, just be aware that there is a resistance level at $ 60. In February, then again in June, the stock hit $ 60 and then fell like a rock.
Give us good news, please
Even though Virgin Galactic got into the space tourism industry early on, the company has recently disappointed its stakeholders with a lack of exciting news – or news at all, for that matter.
Make no mistake, we can’t expect Virgin Galactic to provide an update every week. However, it seems that the competition is taking over now.
As of December 21, the two most recent reports from Virgin Galactic were an oft-cited October flight delay announcement and a rather dismal tax report from November. After that, it was basically radio silence. Virgin Galactic investors are sure to want good news, and soon.
Virgin Galactic has tried to put a positive spin on its most recent updates, but they weren’t particularly encouraging. In October, the company announced that its commercial service is expected to begin in the fourth quarter of 2022.
Thus, the patience of stakeholders will be tested for another year. Additionally, in November’s third quarter 2021 financial results, Virgin Galactic reported a loss of net income of $ 48 million.
Meanwhile, at SpaceX and Blue Origin
In contrast, Virgin Galactic’s main competitors are apparently firing on all cylinders.
Most recently Elon Musk EspaceX had a memorable spaceship launch. The company’s Falcon 9 rocket has been enthusiastically reported to have been launched from Kennedy Space Center in Florida.
Additionally, this rocket carries the Dragon spacecraft on SpaceX’s 24th Commercial Resupply Services Mission for the National Aeronautics and Space Administration (NASA).
Meanwhile, Jeff Bezos Blue Origin has been busy sending people like Star Trek actor William Shatner and National football league (NFL) Hall of Fame member Michael Strahan in orbit.
Blue Origin also included Laura Shepard Churchley, the daughter of NASA astronaut Alan Shepard, on a space mission. Churchley described the weightlessness of spaceflight as follows: “You let go and you go up! Saint moly.
The result on SPCE actions
As competitors move forward, Virgin Galactic hasn’t given its stakeholders much to get excited about lately.
Hopefully, Virgin Galactic has its own “saint moly” moments in the near future. Otherwise, it will be difficult for the company to convince its investors to hang on.
At the time of publication, David Moadel had (directly or indirectly) no position in any of the stocks mentioned in this article. The opinions expressed in this article are those of the author, subject to the publication guidelines of InvestorPlace.com.
David Moadel provided compelling content – and at times crossed the line – on behalf of Crush the Street, Market Realist, TalkMarkets, Finom Group, Benzinga and (of course) InvestorPlace.com. He is also a chief analyst and market researcher for Portfolio Wealth Global and hosts the popular YouTube financial channel Looking at the Markets.
The Virgin Galactic publication is lagging behind in the race for commercial space and it is an issue that first appeared on InvestorPlace.
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