Virgin Galactic’s stock has fallen by 87% in this year. This trend could continue to worsen over the next few months. SPCE’s shares are down over 90% since their all-time peak, wiping out billions in value. The stock was valued at over $179m, with a price of $6.22.
Virgin Galactic’s stock price is falling
In the last few weeks, SPCE’s share price has been under constant pressure. The price dropped as low as $6.2 last Friday. It retested the trendline ascending that links the lowest swings since August 7.
The company announced its new ATM offering and published their financial results. This led to a rapid increase in the sale of the stock.
The company’s revenue was only $402,000, as expected. This is because the majority of their tourist tours have been halted while they build larger crafts.
The stock formed an upward channel on the daily chart. It is shown as orange. The stock then fell to the bottom of this channel.
The stock has moved down below both the 100-day and 50-day moving averages. Both the MACD and Relative Strength Index have also pointed to the downside. There are therefore signs of a bearish breakout in the near future. The next thing to look out for is the low point year-to date at $5.17.
If the price of the stock rises to $8 or above, this will invalidate the bearish outlook. This will increase the likelihood that Virgin Galactic’s stock could rise as high as $10.
Chart of SPCE by TradingView
SPCE will face major challenges in the future
Virgin Galactic is a space tourism company founded by Richard Branson. It has lost money for years as it strives to be the largest player.
The combined loss of the company in its last five financial years was over $2.2 billion. The company’s loss-making pattern will continue for the next couple of years, until it increases its flight capacity.
The results of last week showed that the company’s operations have improved thanks to cost-cutting. The operating loss was reduced to $81.7m from $114m in the same time period of last year.
Virgin Galactic reduced its Research and Development costs from $44.8 to $23 millions, and its Selling, General and Administrative (SG&A), costs to $33million.
SPCE announced that it had over 750 millions in short-term cash investments and SPCE also offered $300 million to the public.
These funds will be used to develop its fleet of spacecraft. These funds will be used to cover its daily expenses.
A more aggressive ATM offer usually results in a greater dilution for the existing shareholder base. The data shows the number of outstanding shares has jumped from 9,8 million to 28,86 million.
Virgin Galactic, we believe, will need to raise more money before they can start commercial flights.
Richard Branson, the founder of Virgin Group has also ruled out further funding for the company. Raising these funds is not going to be an easy task either. The company’s value has fallen to just $179 million. We have previously warned that the company is at a high risk of going bankrupt, just like Virgin Orbit in 2023.
The post SPCE Stock Analysis: Is it Safe to Buy Virgin Galactic Dip? This post appeared on The The Daily Hodl
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