Another Chance for Virgin Galactic to Take off

Another Chance for Virgin Galactic to Take off

What is happening?

In our last article about Virgin Galactic (SPCE), we told you about a major price drop after a successful sub-orbital flight. There are multiple reasons for this movement:

  • Secondary public offering of $500 million shares.
  • Price was overbought after the bullish rally.
  • The expectations about successful flight priced the company in advance.

Today at 00:00 GMT+3 SPCE will present the second quarter 2021 financial results. We will get to know everything about the company's financial condition and plans.

Analysts estimate EPS (earnings per share) of -$0.34 vs. -$0.30 in Q2 FY (financial year) 2020.

Why is it important?

The company is expected to post revenue for the first time since Q1 FY 2020. Virgin Galactic has failed to post positive EPS in any quarter since at least Q1 FY 2018. Losses widened gradually throughout FY 2019 and then precipitously in Q1 FY 2020 before recovering somewhat through the end of that year. Q1 FY 2021 saw losses widen on a sequential basis. Now, analysts predict that Q2 FY 2021 losses will also widen.

Since Virgin Galactic is an innovative company, it isn’t so important for them to have any profit at all. What’s truly matters is the dates of the next flights, especially first customer flights.  

Technical outlook

Currently, SPCE is moving inside a symmetrical triangle, which is considered as a trend continuation pattern. Nevertheless, any positive news with flights dates will have a huge positive impact on price. The main resistances on stock’s way up are $36-38 and $46-47 ranges.

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But if there won’t be any news about the flights, or the financial results will be even worse than expectations, the only support line we have is the strongest 27.45 level.

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As Virgin Galactic, Blue Origin, and a small number of other space companies vie for dominance in the emerging space tourism industry, there may be room for optimism for investors. As of July 12, 600 people had already reserved tickets for space flights at between $200,000 and $250,000 each. An extra 400 people have also reportedly expressed an interest in tickets once they become available, with fares expected to eventually rise to between $300,000 and $400,000.

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