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Virgin Galactic Holdings: Crashing Back To Earth

Apr. 07, 2021 10:19 PM ETVirgin Galactic Holdings, Inc. (SPCE)48 Comments
Wealth Insights profile picture
Wealth Insights


  • Virgin Galactic Holdings is one of the first publicly traded investment opportunities for investors to participate in the space industry.
  • However, the company has a long list of red flags including no fundamentals, cash burn, insider selling, and stiff competition.
  • Even as a speculative investment, Virgin Galactic is a long shot to be a long-term winner.

Sir Richard Branson Rings Opening Bell As Virgin Galactic Holdings Joins NYSE
Photo by Drew Angerer/Getty Images News via Getty Images

It usually pays to be in early on the "next big thing." A lot of folks might tell you that space just might be that next big thing. UBS estimates

This article was written by

Wealth Insights profile picture
Using fundamental analysis and common sense, I provide straightforward insights on stocks and markets. https://www.threads.net/@wealth__insight- Bachelor's degree in Business Administration with a concentration in Financial Analysis. Been investing and following the markets for more than a decade.- Wealth Insights is an investor and investment author. His content is not geared to anyone's investment goals, time horizons, or risk tolerance. Content is for illustrative purposes only and is not intended to displace advice from a fee-based financial adviser. It is not to be taken as investment advice or influence investor decision-making. The accuracy of data is not guaranteed.

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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Comments (48)

doggiecool profile picture
as long as you're doing fundamentals...

when SpaceX IPOs for over $500B, given that SPCE market cap is $7B, how do you think SPCE shareprice will react or behave to SpaceX's IPO??
Wealth Insights profile picture
@doggiecool A Ford and a Porsche are both cars, but doesn't mean they are valued together.
doggiecool profile picture
@Wealth Insights
you clearly have no idea about investor sentiment and the voracious desire to invest in SpaceX. That massive thirst will spill into all space related companies. A smidgen of sloppy leftovers will easily triple SPCE share price. It's a matter of time. Tick tock, tick tock.
@doggiecool remember when hylion was 50 bucks or CCIV 60 bucks? the market was in demand for green vehicles. SPCE had its runup and now it's dead
Why not correct the article to reflect that apples are not oranges and you only invest in apples (no Tim Cook pun intended).
My eyes are wide open and I invested a reasonable amount of funds that I could afford to lose if SPCE fails. Like a few others posting here, I purchased SPCE solely on the bona fides of Branson who has about 50 years of entrepreneurial success; I've read his books and like his business style.
If Seeking Alpha wants to offer practical investing advice, they should just preach about buying ETF's or Mutual Funds ~ set it and forget it ~ rather than pick one stock to buy.
Investing, to me, is not about safe bets, of which most of my portfolio consists, but taking a chance with a reasonable amount of money to support the vision of a proven business leader in a future market. For the record, I enjoy both apples and oranges equally.
Hopium to the max.

This is even more risky proposition than a pre-revenue EV startup or a fly by night weed company.

And one disaster finished Concorde.
I look up and out in the sky at night.

I wonder will humans will go next.

The answer, clear and simple, is NEO.

So, I had bought several of these players last spring and see no reason to panic because not even a second has passed in terms of time and where this is all going (hopefully SPCE will participate).

Any other analysis and skullduggery about any of the companies (whether huge, like BA and LMT, and/or small wild hares, like SPCE) is just space dust twinkling noiselessly across the sea of suns.

Hint: look again at SPCE in June. Huge changes will happen then.

June, 2035, that is ;-)

The best of fortune to us all
SPAC's never have rev and are burning (more or less) cash. As a SPAC investor, you buy the stated aim, not a finished product. SPCE's stated aims (stratospheric trips and supersonic commercial travel) seem to be attractive to enough investors to buy into the business (dream?). Why? B/C SPCE is lead by a proven self made billionaire/entrepreneur and is the only investable space venture worldwide.

Who knows if B & B (Branson & Bezos) decide to merge their space ventures. Imagine what this would do to share price. But even if B & B's big egos got in the way, there's enough room in space for multiple Cos to thrive. Set backs are part 'n parcel of flight/space, Otto Lilienthal and the Wright Brothers would tell you. Too early to write off SPCE.

Long SPCE since $7 and holding.
SuperPac profile picture
Observe Richard Branson's face...see his gestures....

The plastic smile in every pic...the photo opp moments...the incessant PR/media limelight ....the incessant mouthing of every liberal platitude in the most slobbering ways...the soporofic comments...cliche-ridden nonsense....

A con artist is staring at you in the pic.
@SuperPac "Con Artist", aren't you a little unkind? Sir RB can't help the way he looks, can you/we? He certainly has run successful enterprises and provided useful services with Virgin cos. He even earned HRH knighthood for it. Call me old fashioned, but I fondly remember the Virgin book & (classical) music stores.
SuperPac profile picture
Be less supine.
Be less ridiculous...or, perhaps, less jealous.
Buyandhold 2012 profile picture
I had a feeling Virgin Galactic would crash back to earth. Just a hunch.
@Buyandhold 2012 did you buy this as well and never sold with your infinite money supply?
I don’t quite understand the “bull rage” here. Company with no revenues or earnings equals risky: that sounds reasonable.

That said, this isn’t “value investing”, so the idea that fundamentals are somehow relevant rather than an after-the-fact justification is madness. The industry doesn’t exist yet: of course there are no revenues. Perhaps some of the ultra bulls feel like their intelligence is being insulted seeing that the author knows well these things don’t trade on fundamentals.

At some point, either you accept space tourism or don’t. If you do, you might as well jump in after a fifty percent price drop. Sure, that’s crude but admit that this could be fifty bucks tomorrow if Cathy Wood coughs.
@ActLikeYouGotSomeSense she is already coughinf
Weak arguments. You're trying to use value stock based fundamentals to price a growth stock's share price.
1) 7 billion market cap is actually really small compared to a company like Lucid Motors. Lucid Motors also has a lot of competition in the EV space. VG does not. You need to compare SPCE with how market values a growth based company.
2) Dilution does not mean SP will drop, in fact the opposite is often true for growth stocks because its a sign they are spending the money in R&D. SPCE share price has doubled since last offering as of today. But if a value based stock has an offering it usually means they have trouble in their balance sheet.
3) VG will have a monopoly in the market. SpaceX and Blue Orgin will take people to space in rockets which will cost 55 million per ticket. VG will start around 400k and eventually go down to 50k in the long term. No other company in the horizon is even thinking about competing with VG.
4) Yes its all about Action right now when it comes to VG share price. You can't tell me my probability is low in making money as an investor if VG successfully commercializes operation. I agree the SP will go to the gutter if they keep delaying with no results, but this is why SPCE is a speculative stock. But claiming VG to have a long shot in winning is an absurd claim.
@STONKMAN489 don't forget Richard Branson. I laugh at the ignorance of people who call him a scamster. Note : I was a virgin America stockholder who got richly rewarded.
I was very keen on SPCE and managed to get in at 10 and 7 way back before the SPAC merged in 2019. Waiting and waiting, they keep letting us down. And worse than that, if you follow them on twitter, it's like a disney circus over there, with all style and no substance. Really poor communication as to what's going on. Get the rocket back to space, nothing else is important. I had to pull the plug on this investment when they kept rolling out the customer experience people from Disney, for a rocket that they can't get to space. Avoiding now until they prove themselves.
LikesToLearn profile picture
@ideabankau I suggest you check out Rocket Lab $VACQ. 19 launches, 100+ satellites to orbit. Supplying and launching spacecraft for a NASA moon mission soon.
jooper profile picture
'This week, (Fri, April 2, 2021) the company unveiled the VSS Imagine, the first member of Virgin Galactic’s new Spaceship III class to join its fleet of prospective commercial spacecraft. The design is based on Virgin Galactic’s existing SpaceShipTwo but sports a sleek, updated look. Ground testing on the VSS Imagine will begin shortly, with glide flights planned for a summer 2021 takeoff from Spaceport America...Simultaneously, Virgin Galactic hopes to make further progress on the manufacturing of VSS Inspire, the second SpaceShip III slated to join the fleet. Ramping up SpaceShip III production will play a key role in hitting the company’s longer-term target of launching 400 space flights per year, per spaceport.'

Well, sounds Inspiring! Highly reusable, safe and more efficient launch philosophy, much higher reliability factor not having to overcome the incredible inertial mass of a liquid rocket engine starting from zero velocity.

Not saying that launching into outerspace strapped onto a barely controlled explosion of a rocket engine wouldn't MORE thrilling though!
I don’t think it hurts to throw a small amount in your portfolio as a long term spec play. Have a little fun bud, why so serious.. maybe $2k becomes $100k in 10 years, worst case you lose $2k... but if it hits.. all you needed was a little bit, but if you lose it all then you only had a little bit.
Wealth Insights profile picture
@YaMutha This is a good point. Thank you for reading.
RsqBoss profile picture
LOL--"actions always speak louder than words"??? You obviously have no clue about Chamath and his other SPACs he is getting involved with. Maybe listen to him and grab a clue as to why he pulled his money for other projects.....and as you said, and we know....he's still exposed in other ways to SPCE. And it may be a long shot, but your DD seems more topical than in-depth. Thanks for the time, but move along.....
Wealth Insights profile picture
@RsqBoss I appreciate the comment. I am familiar with Chamath, and while he is no doubt a smart dude, that doesn't necessarily translate to retail investor success. Best of luck, and thanks for reading.
@RsqBoss Chamath let everyone down. He is the captain that abandoned ship ahead of everyone else when there is danger
@Wealth Insights you are one of the more mature SA authors
ehivan24 profile picture
Tesla was “burning cash” at the beginning as well.
Wealth Insights profile picture
@ehivan24 Many companies burn cash, but I see much more risk in SPCE than most others. They will need to prove themselves over time. I could always be wrong! Just giving my two cents :)
>>I will be avoiding this stock indefinitely.<<

Good! Maybe you will be avoiding writing about this company too, indefinitely.
Wealth Insights profile picture
@Tatech Always helpful to get some opposing views for your own analysis. Bull bubbles are dangerous, and I could very well be wrong :)
@Wealth Insights I have tons of comments on SPCE (you just need to read them) and I am tired of constantly repeating myself just to address one hit piece after another for the shorts, from authors and commentators who have no clue as to what is happening...or just refuse to see the greater picture and the sacrifice people are making to advance the frontiers of the human experience...and these are real sacrifices, like the loss of life.
Chillbizzee profile picture
@Tatech Can you really blame them? A non revenue, cash burning, founder selling, speculative technological revolution. This one is hard for analysts. This takes vision, a certain amount of faith or hope and high risk tolerance in a volatile equity.

Wishing them success and no more loss of life.
budcorona profile picture
A lot of very smart and very rich people are involved in the EV and space race. People, just like me, who are trying to be included in that 1% are still writing for and reading SA. Nothing personal but, fundamentals be damned, I wanna fly to the moon. Long SPCE and ARKX.
Wealth Insights profile picture
@budcorona Will be fascinating to see play out over coming decade!
rurichyet? profile picture
Me too. Absolutely disagree. Lots of nonsense.
Wealth Insights profile picture
@rurichyet? Feel free to disagree, but where is the nonsense?
Thank you for an objective article! I have a lot of risky companies in my portfolio but zero revenue companies is where I draw the line. Not for me
Wealth Insights profile picture
@GwailoHK Pre-revenue is scary but not a deal breaker for me. A lot of risk factors in case of SPCE that could prevent/delay monetization of the business though. SPCE is more risky than even most other pre revenue companies.
First, thank you for the article. But I have to disagree with you on this. While you do touch on some very valid points I actually think this company is very undervalued and should not be measured on the traditional basis. The main reason the shares are down is bc they were unable to complete a successful test flight to date. Plus CH selling his personal stake didnt sit well with investors. I am certain the test flight in May or June will be a successful one. But that is why I own the shares. Anyway, thank you for the article. I always love to listen to what others are thinking.
Wealth Insights profile picture
@wallstbears Thank you for your comment, feedback, and respectful input. I could very easily be wrong, and SPCE could be worth $200B in a decade. I just give my thoughts, both bulls and bears make markets :)
I disagree with you. I’m no expert but with 2 space ports, contracts with NASA and others along with private flight bookings already the revenue stream is visible. Many people are pessimistic because the lack of another test flight and one founder selling his personal stake. I find it only optimistic, unlike SpaceX there is no crash and lost of vehicle. The stock has been holding at its current price for awhile now, I don’t foresee any major shift until the next flight. Just my view.
@Jimmy54 this company was supposed to commence flights in 2008. Yes, one vehicle crashed and a pilot died. This is a junk company without any viable product. Another crash and any potential for tourism is gone. I do remember Branson mourning the loss of Scaled Composites pilot and washing away and responsibility.
Wealth Insights profile picture
@Jimmy54 yes, progression of flights will dictate sentiment/stock price.

What happens if a flight results in passenger death? How many test flights, and/or commercial flights need to take place without incident to confirm confidence in safety/technology?
God forbid there is a crash that involves tourists but if there is, that will be the end for Virgin Galactic. If Space-X did suffer such a tragedy they will still have their core business of launching satellites, Starlink and servicing the ISS and beyond.
Space-X are testing new prototypes and crashes/aborts are expected. Virgin were demonstrating an allegedly near ready craft which failed. I'd be a very nervous customer if on their first commercial flight.
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