Virgin Galactic Holdings, Inc. (NYSE:SPCE) Highly Speculative, But Massive Potential

Virgin Galactic Holdings, Inc. (NYSE:SPCE) Highly Speculative, But Massive Potential

$SPCE #VirginGalactic #NYSE #USA #Aerospace #Stocks #Markets

Virgin Galactic
Ticker: NYSE:SPCE
Price: $17.45
Recommendation: Buy

Virgin Galactic News

Virgin Galactic (SPCE) is one of the most exciting stock currently with investors waiting anxiously in anticipation of commercial launch. With the stock cooling off from its March highs of $42, I believe current prices present a good opportunity for investors to begin accumulating shares. However, expect extreme volatility in the stock as the company ramps up towards commercialization. Buckle up.

One of the reasons why SPCE is very speculative is because of the fact that the company has not launched commercial operations, and thus has no revenue other than cash received from collaborations with researchers and the U.S. government, as well as sponsorship agreements. Furthermore, commercial launch will depend on the Federal Aviation Administration’s approval and the timing and cost of the verification process may drag further, increasing the company’s cash burn. Speaking about cash burn, SPCE is currently burning over $200 million per year. While the company still has about $800 million in cash, further delays in commercial launch will force the company to issue additional shares, diluting shareholder value.

Another major risk is safety. Due to the recent Boeing (BA) 737 Max crashes, the FAA has become extra stringent when it comes to aviation safety. In addition, there are still uncertainties to whether SPCE can complete a voyage with six non-pilot crew members – the best progress so far was in 2019, where the company completed a test flight with one non-pilot crew member. Additionally, accidents are bound to happen, which may not only destroy consumer confidence in SPCE but also delay any progress towards commercialization. In 2014, for example, SPCE’s VSS Enterprise crashed, killing one of its pilots.

Lastly, space tourism is an emerging market and while there’s a lot of excitement and hype towards the industry, such service offering is not proven yet. Space tourism will be a reality in the future, but the timing and success of the industry are still uncertain. Also, SPCE may face intense competition from other space exploration companies such as Blue Origin (BORGN) and SpaceX (SPACE), two juggernauts who have substantial resources and the expertise to launch their own commercial spaceflight programs, thus posing as major headwinds for SPCE.

Not all is dark and gloomy for SPCE – there are massive opportunities if the SPCE management team can pull this off. Firstly, while Blue Origin and SpaceX pose a major threat for SPCE, SPCE has the first-mover advantage in the commercial spaceflight business. In addition, SPCE has the technological capabilities to execute a horizontal take-off to space, something that the other two companies have yet to achieve. Horizontal take-off may also be deemed safer for passengers.

Business Summary

Virgin Galactic Holdings, Inc., formerly Social Capital Hedosophia Holdings Corp., is an aerospace company that provides human spaceflight for private individuals and researchers.

The Company is focused on developing a spaceflight system to offer customers a multi-day experience culminating in a spaceflight that includes several minutes of weightlessness and views of earth from space.

Through its aerospace development subsidiary, The Spaceship Company, LLC, the Company manufactures its space vehicles in Mojave, California. Its spaceflight system consists of three primary components: its carrier aircraft, WhiteKnightTwo; its spaceship, SpaceShipTwo, and its hybrid rocket motor.

SpaceShipTwo is a spaceship with the capacity to carry pilots and customers or payloads, into space and return them to earth.WhiteKnightTwo is a twin-fuselage aircraft designed to carry SpaceShipTwo up to an altitude of approximately 45,000 feet where the spaceship is released for its flight into space.

Price Performance

Relative Valuation

Technical Indicators

Overall, the bias in prices is: Downwards.

Note: this chart shows extraordinary price action to the downside.

By the way, prices are vulnerable to a correction towards 18.79.

The projected upper bound is: 20.65.

The projected lower bound is: 14.29.

The projected closing price is: 17.47.

Candlesticks

A black body occurred (because prices closed lower than they opened).
During the past 10 bars, there have been 2 white candles and 8 black candles for a net of 6 black candles. During the past 50 bars, there have been 17 white candles and 32 black candles for a net of 15 black candles.

Momentum Indicators

Momentum is a general term used to describe the speed at which prices move over a given time period. Generally, changes in momentum tend to lead to changes in prices. This expert shows the current values of four popular momentum indicators.

Stochastic Oscillator

One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 72.0209. This is not an overbought or oversold reading. The last signal was a buy 12 period(s) ago.

Relative Strength Index (RSI)

The RSI shows overbought (above 70) and oversold (below 30) areas. The current value of the RSI is 46.11. This is not a topping or bottoming area. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a sell 33 period(s) ago.

Commodity Channel Index (CCI)

The CCI shows overbought (above 100) and oversold (below -100) areas. The current value of the CCI is 80. This is not a topping or bottoming area. The last signal was a sell 0 period(s) ago.

MACD

The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a buy 2 period(s) ago.

Rex Takasugi – TD Profile

VIRGN GLCTC HD A closed down -0.260 at 17.450. Volume was 24% below average (neutral) and Bollinger Bands were 62% narrower than normal.

Open     High      Low       Close      Volume
17.840   18.460    17.290    17.450     12,749,765
Technical Outlook
Short Term:        Neutral
Intermediate Term: Bearish
Long Term:         Bullish
Moving Averages: 10-period     50-period      200-period
Close:           17.22         19.40          17.06
Volatility:      68            99             134
Volume:          12,984,511    17,972,118     16,088,453

Short-term traders should pay closer attention to buy/sell arrows while intermediate/long-term traders should place greater emphasis on the Bullish or Bearish trend reflected in the lower ribbon.

Summary

VIRGN GLCTC HD A is currently 2.3% above its 200-period moving average and is in an downward trend. Volatility is low as compared to the average volatility over the last 10 periods.

Our volume indicators reflect volume flowing into and out of SPCE.K at a relatively equal pace (neutral). Our trend forecasting oscillators are currently bearish on SPCE.K and have had this outlook for the last 22 periods.

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