Virgin Galactic Inc. is one of the most well-known international companies that organize space travel sessions for tourists. Except for selling tickets for such journeys, Virgin Galactic Inc. launches satellites and works on different models of spaceships. Currently, clients of the company can buy tickets for suborbital flights, however, the company is planning to start organizing orbital flights as well.
The services of the company have great prospects in the future. This business works hard to contribute to the development of space tourism, which is one of the most fantastic dreams of humanity. However, over the recent months, the Virgin Galactic stock price has been declining? What are the reasons? Will lit recover? Is it a good idea to invest in it today?
Performance of the Company
The financial results of the last fiscal quarter of 2021 were reported on 22 February 2022. The results in 2021 didn’t appear to be better than the ones reported a year ago. During the fourth quarter of 2020, they lost around $75 million on operating, while in 2021 the digits increased up to $81 million. During the last quarter, the company generated $141 million of revenue.
Throughout the entire 2021 fiscal year, Virgin Galactic generated around $3.3 billion. The total sum of net losses in 2021 amounts to over $350 million.
Key Events
- At the end of June 2021, Federal Aviation Administration (FAA) approved the license of Virgin Galactic, which allowed the company to organize commercial passenger space flights. This process attracted a lot of attention from the publicity, and the successful outcome allowed Richard Branson to schedule his first space flight. Thanks to this process, the SPCE stock increased from $22 in April to $46 by the beginning of June.
- On March 14, 2022, Blue Origin, one of the major competitors of Virgin Galactic in the space tourism industry, announced a flight of 6 high-profile passengers. The company reported that it would be the 4th human flight for the New Shepard program. After the announcement, SPCE stock dropped 7.5% in a single day.
- One more event that contributed to the decrease of the SPCE stock was a successful launch of a private space mission that took place on April 8, 2022. The launch was organized by SpaceX and Axiom Space. Four people were sent to the International Space Station. After the successful launch took place, the SPCE stock dropped 2.75%. As of the date of writing, the share is traded at $6.08, which is 28% lower than on April 8.
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Pros
- Virgin Galaxy reported that in 2021 it has a pool of more than 700 clients who are planning to take part in space flights at the end of 2022. In 2021, for example, the company signed 200 new clients.
- The company reports solid cash reserves. This means that the company is able to continue operating the way it does today. Virgin Galaxy Inc. reports having enough cash reserves to pay out loans and debts. This gives investors some confidence about the future performance of the company.
- The company has announced the development of the Delta class spaceships. The release is supposed to take place in 2025. This is quite a short period for developing a new class of spacecraft. If the company manages to succeed, it will faster launch its customer flights.
- The announcement of new commercial flights will increase the dynamics of ticket sales.
Cons
- SPCE is a risky investment. Respected financial analysts say that the company needs to increase ticket sales and the number of customer flights to raise capital. Currently, there is no clue that Virgin Galaxy will succeed in Delta class spacecraft development within the stated terms. Experts doubt that the company will find all the necessary components and complete testing so quickly.
- Historically, Virgin Galaxy Inc. isn’t very successful in ticket selling. On average, the company attracts 70 new customers annually. This is not enough. Virgin Galaxy needs around 1,000 paying clients every year.
Final Thoughts
Although the SPCE stock is a risky asset, our analysts believe that holding it is a better idea than selling it. Based on the current selling price of $6.08, some analysts forecast that the stock might reach $9 per share by the end of 2022.
Whatever strategy you choose, “holding” or “selling”, keep in mind that this industry is highly competitive. Therefore, investing in a short-time perspective involves big risks.
