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Is Virgin Galactic Stock A Buy?


  • Non-exclusive technology license means if they succeed, they will face competition.
  • Significant capital spending will also be required, and the market is small.
  • Huge volatility and risk of a short squeeze make it a risky short.
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Virgin Galactic (NYSE:SPCE) describes itself as "a vertically integrated aerospace company pioneering human spaceflight for private individuals and researchers." The firm licenses the "Virgin" brand name from Richard Branson's Virgin Group, and they went public through a merger with a special purpose acquisition company [SPAC] run by Chamath Palihapitiya. The firm has been planning to test their craft from a spaceport in New Mexico, but there have been multiple delays.

Drivers behind SPCE Meteoric Stock Price Rise

The company has become very much a "darling" of the market recently, with space companies in general being bid up. They are also a constituent of the ARK Autonomous Technology & Robotics ETF (ARKQ). That is important because assets to all the ARK funds have been growing, which increases demand for the stock, and because there are many investors who are following Ark's moves. Speculation in the name increased recently as ARK announced they are launching a Space themed ETF. Virgin Galactic is likely to be a holding in the ETF, considering they already own it in another of their funds and many of the large next generation space companies are still private (Space-X, Blue Origin). That provides a potentially significant amount of buying to the stock, and excitement around the fund propelled the stock to new highs.

SPCE Stock Forecast

While there have been a number of significant positives for the firm, their momentum has been rocked by some bad news recently as well. Notably, ARK has been selling shares from their existing ETFs, which is a negative. Both in the short term (as the supply of shares increases) but also potentially in the long term. If that implies Cathie Woods and her team is less bullish on the company, that may suggest that Virgin Galactic won't be as big a constituent in their new space ETF as

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This article was written by

Safety In Value profile picture

Safety In Value is a microcap specialist providing research on underfollowed small cap value stocks and analysis for actionable special situations. He looks for companies with a margin of safety to their value, and avoids downside risk. He believes strongly in the first rule of investing - ""Do not lose money.""

He runs the investing group Microcap Review. Coverage includes: multiple monthly arbitrage and special situation ideas, “Net-Net” ideas covering companies where the cash and current assets exceed all the liabilities and the market cap, and coverage on general value stocks in the microcap space. He believes any small company trading for less than its worth is fair game.Learn more.

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Comments (49)

Guess that short position not that risky. Down 20 pct from posting. Still just a losing vanity project.
Safety In Value profile picture
@Simeroth1 It was down quite a bit while this was in the editorial process as well. There's still a risk of a one-off jumps here, so I do think it is a bit of a risky short because of the path dependence of shorting.
ASB Capital profile picture
@Safety In Value Small position sizes help with that a lot. Spreads out the amount of time in which you get to be right and reduces the impact of being wrong in the short-term.

Start small enough and you can also double down!
Safety In Value profile picture
@ASB Capital Those are good points. I just have a pretty high bar for taking short positions. I might add puts here to a basket of overvalued names, but the puts are very expensive.
If you watch Sir Richard's story on his balloon trip you will notice the man does not like to be embarrassed. If he has any say in it he will fly in the aircraft. It will fly. The spaceplane has more value than just a tourist attraction and of course has got a "little" support from NASA. I honestly think more than NASA is interested since on the tourist side of things they do not want to overshoot altitude since that is possible with this aircraft. Also I speculate the idea of going into space seems to have a subtle unconscious drive so the tourism industry in any form will thrive. I wanna go. But its just smart to work out the bugs first.
LikesToLearn profile picture
SpaceX will likely launch private citizens to space before Virgin Galactic. They will definitely make it to orbit first.

Of course, SpaceX is private and will likely stay that way for a long time. So go with their closest competitors. If you're interested in investing in space, checking out Rocket Lab and Astra is a must.

I emphatically agree about Rocket Lab...Astra I'm agnostic on, but I can see where it has a future...as to the above article, it is so shot full of holes I wouldn't know where to begin except to say it would make a block of swiss cheese jealous. Musk, Branson, Beck and those guys running Relativity Space...America's got some real talent going on.
@Tatech Branson is a Brit
@Kevin Dunn Musk: South African, Beck: New Zealander, Branson: British...so what?
MikeFromNZ profile picture
In SPCE nobody can hear you scream.
What I know the longer VG delay the riskier is their business. Investor had pull out & ARK trimmed their stake that is not a good sign. Not to mention millions monies drained out every month. Yes there is no competitor right now but if there will be VG's pie will be eaten and little left for them. Yes fights are fully booked but how if those people finally get tired waiting? Refunds? In business ocean the faster fish will always win. No doubt their marketing is great. Selling fascinating dreams, supersonic plane, space tourism but so far are just marketing with no execution. Hope it is not just like solar window hype. VG better keep up their pace.
kthor profile picture

rich people won't cancel or ask for refund, they want the bragging rights!
The only definitive statement I can make about SPCE is that their $10BB market cap is wildly mispriced. What I don’t know is whether it’s wildly mispriced to the upside or the downside. I’m long, but only with my play money. I want to see the company succeed but don’t have a clue whether it will or won’t.
@RenoGuy I’m with you. This is just a fun premise to invest in; with play money. The applications of this technology would change travel as we know it. IF it can get off the ground.

Very long SPCE
Chillbizzee profile picture
“The company's business model is unlikely to ever produce the type of profits that would be needed to justify the current valuation,”

I don’t think you have a good grasp of the TAM. I know the price is hard for mortals to get, but there are a lot of ppl with god like money. This stock might have issues now, but if the tech works this is going to be an expensive stock.

They might have competition but it will be like NFLX’s (or TSLA’s), many years with none and now some late coming stragglers. These guys are struggling after years, no one is just going to get a bunch of money and create a space ship to compete over night.
As for those who do have the years of experience those flights cost 50 million. I think there would be room for both and I welcome it.

Why would Kathy Woods and ARK bail now, having just bought in? They didn’t realize flight delays are precedented? Her space ETF will launch soon and I don’t see her turning away from an exciting space tourism co for only rocket or satellite ones.

“Virgin is fundamentally a marketing organization”
This seems naive and inaccurate. Their recent sales hires are a sign that they believe they WILL have something to sell. These are not stockbrokers, their product is not a stock, but a incredibly forward thinking tourist experience.

SPCE is the definition of speculative, no question, downside is $0. However if these folks haven’t just been toying all these years in a fantastical desert and start slinging folks into orbit this is going to get incredible attention and likely profits for those with foresight and fortitude.
@Chillbizzee exactly
27 Mar. 2021
@Chillbizzee couldn’t agree more!
AlexAway profile picture
Just a couple of facts: since their first day back in 2004 they never had a single succesful flight! For 17 years the company has not seen space!
All those funny people who compare VG with Tesla and especially with SpaceX, please let me know what you smoke. SpaceX technology and abilities are far and away beyond anything VG has done by now and could do in the coming years. SpaceX sees space every single week, VG probably not see ever. From here, let's see. It was a very nice play, great ride from nowhere to hype valuation. But that's all, finita! Unpack your bags, dear investors, the flight is delayed for a couple of years at least (first test flight, of course for those funny investors who live in la-la-land and think of billions of revenues by 2022).

>>SpaceX technology and abilities are far and away beyond anything VG has done..<<

AND, Virgin Galactic technology and abilities are far and away beyond anything SpaceX has done.
AlexAway profile picture
Sure! Which unique abilities and technology, please?

No parachute, no heat shield, no extreme g forces...their feathering technology is as unique as water is wet...if you can't see that then you are as blind as a bat. And as long as no one steals that technology they are, and will continue to be, the only game in town for doing what they do the WAY they do it.
If most of the cost of going to space is in the fuel wont virgin have an advantage over space x since they dont use fuel to land?
Chillbizzee profile picture
@Chillybear Space X uses fuel to save and reuse its rockets, the purpose being to save money. Most fuel is burned taking off and “Slipping the surly bonds of Earth”. Which I assume is why VG starts with a plane.
02 Mar. 2021
Nothing but hype here. These guys build the worst composites structures on earth. They are unable to inspect the trash they build. More deaths will follow. Also there’s no money in this business. And no, their configuration will never work for orbital missions.
Chillbizzee profile picture
@20kts Why do you say they cannot inspect the composite? If I bought a racing sailboat mast I’d have it inspected, let alone a rocket ship.
@Chillbizzee dont feed the trolls
But no one mentions that any of their competitors are still 5 years away from their first test flight. Most competitors don’t even have a prototype. SPCE owns this market right now, that’s why they are taking their time to make sure everything is perfect. I’m long all day.
Chillbizzee profile picture
@Tstauber90 They have a large first mover advantage here... if they launch.
John Miller profile picture
The build out of and improvements to the MAV patents is what gives SPCE their value. The tech seems superior to the capsule reentry because its greater reusability and, lets face it, elegance. I don't know if a modified shuttlecock tech will ever actually be suitable for reentry from orbit and at high speeds, but if it is they are miles ahead right? Everyone else will be parachuting you to a landing zone and picking you up in a helicopter while SPCE lands you at a gate with a "vertically integrated :)" Starbucks.

Even the hybrid rocket motor idea is elegant and seems superior to the competitions' vertically landed rockets (yes this is debatable I know). Plus the mother ship idea just makes a lot of sense.

They are also have some work on point to point and astronaut training.
WikiSteve profile picture
1) The 10-K filing you've quoted is for the Fiscal Year Ended December 31, 2019. 2) Mojave Aerospace Ventures or MAV is now called The Spaceship Company which Virgin Galactic is the sole owner now. So if they're paying any royalties it's to themselves.
@WikiSteve now this is the kind of a comment for which it's worth reading tons of balast in comment threads. Thanks for that!
Safety In Value profile picture
@WikiSteve Of course that's the 10-K I'm quoting. As I said it's the most recent one, the 2020 10-K isn't out yet.

Also, while you are correct Virgin Galactic is sole owner of the spaceship company, that is a separate firm from Mojave. Mojave owns the patents on the rocket motors, and that licensing deal is absolutely still in place.

Do a thought experiment if you don't believe me. Virgin Galactic bought the remainder of the Spaceship Company in 2012 (link below). If that invalidated the royalty fees, why were they still publishing language about those royalties in the 2019 10-K seven years later?

itamarro profile picture
@WikiSteve MAV is a separate company from The Spaceship Company. See more here: en.wikipedia.org/...
They’re generating revenue by hauling loads to ISS for NASA this quarter but you don’t mention that
irc203 profile picture
@Foerill Of course not. It is a hit piece.
Then I hold. Been accumulating for exactly a year now.
@Foerill I am long SPCE but don't think they are the company that is hauling loads to the ISS for NASA.
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