New Mexico-headquartered Virgin Galactic (NYSE:SPCE) was famously founded by billionaire Richard Branson with a vision of taking people who aren’t necessarily professional astronauts into space. It’s an intriguing business model — one you’ll need to believe in if you plan to hold SPCE stock for the long term.
So far, it hasn’t been so easy for Virgin Galactic to capitalize on its far-reaching venture. The company might have been an early contender in the space tourism market, but its competition is making fast progress.
Meanwhile, Virgin Galactic has been fraught with frustrating flight delays. Likely fed up with those setbacks, UBS analyst Myles Walton went so far as to downgrade SPCE stock from “hold” to “sell” while drastically slashing his target price from $26 to $15.
Walton’s call was spot-on, as SPCE stock just tumbled to $15. This might sound like a bargain, but if Virgin Galactic doesn’t provide some positive updates soon, there won’t be any rocket fuel left for the shareholders.
A Closer Look at SPCE Stock
From a technical perspective, there might be some justification for holding SPCE stock.
Back in May, the stock fell to $15 and then bounced quickly. As of Dec. 23, the Virgin Galactic share price was somewhat close to $15, so the market might provide some support there.
The problem with support levels, though, is that they’re not guarantees of a bounce. Time and again, stocks have fallen below these levels as more investors simply give up and move on to better opportunities.
If you do choose to “buy the dip” in SPCE stock, just be aware there’s a resistance level at $60. In February and then again in June, the stock reached $60 and then dropped like a rock.
Give Us Some Good News, Please
Even though Virgin Galactic got into the space tourism industry early, lately the company has disappointed its stakeholders with a lack of exciting news — or any news at all, for that matter.
Don’t get me wrong — we can’t expect Virgin Galactic to provide an update every single week. Still, it feels like the competition is getting the upper hand now.
As of Dec. 21, the two most recent news items that came from Virgin Galactic were an oft-cited flight delay announcement from October and a rather dismal fiscal report from November. After that, it’s basically been radio silence. Virgin Galactic’s investors undoubtedly want some good news, and soon.
Virgin Galactic tried to put a positive spin on its most recent updates, but they weren’t particularly encouraging. In October, the company disclosed that its commercial service is expected to commence in 2022’s fourth quarter.
So, the stakeholders’ patience will be tested for another year. Moreover, in November’s third-quarter 2021 financial results, Virgin Galactic reported a net earnings loss of $48 million.
Meanwhile, at SpaceX and Blue Origin
In stark contrast, Virgin Galactic’s chief competitors are apparently firing on all cylinders.
Very recently, Elon Musk’s SpaceX had a momentous spacecraft launch. It was reported with excitement that the company’s Falcon 9 rocket launched from Florida’s Kennedy Space Center.
Moreover, that rocket is carrying the Dragon spacecraft on SpaceX’s 24th commercial re-supply services mission for the National Aeronautics and Space Administration (NASA).
Meanwhile, Jeff Bezos’s Blue Origin has been busy sending the likes of Star Trek actor William Shatner and National Football League (NFL) Hall of Fame member Michael Strahan into orbit.
Blue Origin also included Laura Shepard Churchley, the daughter of NASA astronaut Alan Shepard, in a space mission. Churchley described the weightlessness of space flight, saying, “You just let go, and you go up! Holy moly.”
The Bottom Line on SPCE Stock
While the competitors forge ahead, Virgin Galactic hasn’t given its stakeholders much to get enthused about lately.
Hopefully, Virgin Galactic will have its own “holy moly” moments in the near future. Otherwise, it’s going to be difficult for the company to convince its investors to hang on for the ride.
On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
David Moadel has provided compelling content – and crossed the occasional line – on behalf of Crush the Street, Market Realist, TalkMarkets, Finom Group, Benzinga, and (of course) InvestorPlace.com. He also serves as the chief analyst and market researcher for Portfolio Wealth Global and hosts the popular financial YouTube channel Looking at the Markets.