Why Virgin Galactic Dropped after Branson’s Flight

Why Virgin Galactic Dropped after Branson’s Flight

What happened?

Virgin Galactic’s founder Richard Branson successfully flew on the company's spaceplane to suborbital space! His trip was the first among space tourism pioneers, beating Blue Origin’s Jeff Bezos (ex-CEO of Amazon) and SpaceX’s Elon Musk. However, the stock of Virgin Galactic (SPCE) dropped. Why?

Well, the fact that Branson flies to space was known well ahead of the flight itself. In other words, it wasn’t a surprise for investors. They priced to this company’s advantage before the event and start selling it afterward, that’s why the so-called ‘buy the rumor, sell the fact’ scenario occurred.

More headwinds

Virgin Galactic dropped also because of the announcement it would sell about $500 million worth of additional shares. The secondary offerings tend to press a stock value down as they increase the pool of the company’s shares, leaving every investor with a smaller piece of the total float. Besides, Blue Origin’s Bezos steps on the toes of SPCE’s Branson. Jeff Bezos will fly to space on July 20. After all, investors concern whether the demand for tickets to space will be high enough to cover the company’s costs.

Overall, the forecasts are not bright. Bank of America wrote that SPCE is already richly valued. Another bank, UBS, said the stock has little upside potential left. So good that FBS traders can open not only buy orders but also sell positions while trading stocks.

Why is it important?

A trader can learn from this example how the market can react to the earnings reports. Indeed, strong data doesn’t always push the stock price up, that’s why it’s necessary for investors to be always updated with the latest news.

Technical outlook

The stock is moving down and down. It’s likely to reach the support of $35.00 soon, which it has failed to cross many times in June. The price may stop for a while at the $35.00 level. If it breaks it, the way down to the low of June 4 at $31.00 and then to $29.00 will be clear. However, the stock can’t fall all the time. Once, it will reverse up! The current resistance levels are the 50-period moving average of $42.00 and the high of June 6 at $47.00.


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Apple event surprised traders
Apple event surprised traders

Every year in early autumn Apple holds its event where it presents new iPhones, Apple Watches, and iPads. This year wasn’t an exclusion. But yesterday’s presentation didn’t result in Apple stock growth, and here’s why.

Latest news

FED and BOE Make Another Attempt to Beat Inflation
FED and BOE Make Another Attempt to Beat Inflation

The Federal Reserve (Fed) will announce its Interest Rate Decision and make a statement about the future monetary policy on Wednesday, September 21, GMT+3. After the higher-than-expected inflation numbers published on September 13, there’s almost no doubt the Federal Reserve will come up with another 75-basis-point rate hike. However, surprised by the CPI numbers, several Fed members announced the possibility of a 100-basis-point rate hike on Wednesday.

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