The new SPCE race

Virgin Galactic Inc. (SPCE)

Is it time to prepare the hyperdrive? Virgin Galactic will be the first spaceflight company to make the jump into (light speed) space tourism.

"We are at the vanguard of a new industry determined to pioneer twenty-first-century spacecraft, which will open space to everybody and change the world for good." - Sir Richard Branson, Founder, Virgin Galactic.  

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Fundamentals

The “new” space race is in full swing as Virgin Galactic Holdings became the first space tourism business to go public on the 28^th of October 2019. Social Capital Hedosophia will hold a 49% stake in the space flight and tourism upstart following the special purpose acquisition company (SPAC) transaction, while Sir Richard Branson will own 51%.

Much like all the long-awaited IPOs in 2019, SPCE had a stellar opening day but sold off as much as 20% below its opening price in the days to follow.

Some of the concerns creeping in are the lack of a “real” business model, seeing as it has not yet put a customer into space. The company also recorded losses of $86.7 million from $2.4 million in revenue for the first six months of 2019. The enormous risks involved with spaceflight might also be a concern for investors at this time, not to mention the “early bird” ticket holders.

Outlook

With planned commercial flights as soon as next year, Virgin Galactic has already secured over 600 customers who have already forked up the $250 000 for a single ticket. The company plans to increase the fare once it starts taking new bookings. Virgin Galactic has also attracted investment from The Boeing Company’s start-up division HorizonX Ventures.

The commercial space sector will see Musk (SpaceX), Bezos (Blue Origin) and Branson (Virgin Galactic) squire off in this industry projected to be worth over 2.7 trillion by 2045 according to Bank of America Merrill Lynch.

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Chart Life

It is still early days, but the price action needs to get above the significant overhead resistance level at 10.50 to signal that buyers are entering the market once again to drive prices higher. We might see buyers coming in driving prices higher from the recent lows to the $10.50 per share level.

Source - Bloomberg

Portfolio particulars

• Portfolio Hold (Current)*
• Portfolio Buy opportunity: $10.50 per share** 
• WhatsTheBeef long term target price: $12.94 per share. 

Know your company: Virgin Galactic Inc. (SPCE)

• Virgin Galactic is a spaceflight company within the Virgin Group and is headed up by former NASA chief of staff George Whitesides.
• Virgin Galactic was founded in 2004 by British entrepreneur Sir Richard Branson, who had previously founded Virgin Atlantic airline and the Virgin Group.
• Some of the early ticket holders paying the $250 000 fares include Justin Bieber and Leonardo DiCaprio with the space flight estimated to last about 90 minutes.
• The American footwear, sports, and casual apparel, Under Armour (UAA) will be responsible for the Virgin Galactic space suites.

*Portfolio Hold (Current) refers to investors who already hold the stock within their portfolio.

**Portfolio Buy opportunity refers to Technical level crossed which might imply that the markets behaviour would support the outlook and Close above refers to a share price close above a Technical Resistance level.

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 Follow Barry Dumas
@BEEF_FINMARKETS

Barry is a market analyst with GT247.com, with a wealth of experience in the investment markets. Now in his tenth year in the markets, Barry "The Beef" Dumas brings a combination of technical analysis and fundamental insights to the table.