SPCE stock forecast: Virgin Galactic key milestone nears

August 10, 2023 12:09 AM PDT | By Invezz

SPCE stock forecast: Virgin Galactic key milestone nears — Image source: Invezz

Latest Virgin Galactic news

Virgin Galactic will be in the spotlight on Thursday as the company is set to make a major milestone. The firm, which has been building its products for about two decades, will fly the first commercial customers for the first time. The company has a backlog of 800 customers.

In a statement earlier this month, Virgin Galactic said that its revenue in the second quarter came in at $2 million. The management believes that it will deliver about $1 million this quarter.

Its operating expenses jumped to $141 million from $110 million in Q2’22. The GAAP net loss jumped to over $134 million while its EBITDA was minus $116 million. SPCE has over $980 million in cash, which are enough to sustain it until ~2025. Its free cash flow will be between $120 million and $130 million in Q3 and Q4.

I believe that Virgin Galactic is a risky long-term and short-term investment. For one, it competes with well-funded companies like SpaceX and Blue Origin. Further, I have concerned about the company’s profitability and risks involved in space travel.

Virgin Galactic has 800 reservations. With a ticket price of $450,000, it means that the backlog is worth $360,000,000, against a market cap of $1.2 billion.

Each flight will have six passengers, meaning that it will generate $2.7 million. The operational costs are estimated to be $586k, bringing a gross profit of $2.1 million.

Therefore, while Virgin Galactic flights will be profitable, I believe that the path will be challenging. Also, it is unclear whether there will be enough demand after the company completes the 800 backlog.

SPCE stock price forecast

A technical analysis can provide more information about what to expect in the future. On the daily chart, we see that the Virgin Galactic share price has been in a strong bearish trend in the past few months. Most recently, it has moved below the descending trendline that connects the highest level since August.

The stock has dropped below the 25-day and 50-day moving averages. Most importantly, the shares are slightly above the important support level at $3.02, the lowest level on April 10th and in December.

Therefore, my long-term view for the stock is bearish, with the next support level to watch being at $2.50. In the short term, however, the shares will likely show some volatility since Virgin Galactic is still a popular meme stock.

The post SPCE stock forecast: Virgin Galactic key milestone nears appeared first on Invezz.

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