Gear Up for a Historic Test Flight With Virgin Galactic Stock

It’s not every day that you have a chance to invest in a company that might actually be in the history books someday. Virgin Galactic (NYSE:SPCE), founded by billionaire Richard Branson, is preparing for its first powered test flight, and SPCE stock traders are definitely getting excited.

Virgin Galactic (SPCE) banner hanging on the New York Stock Exchange building to celebrate its IPO.
Source: Christopher Penler / Shutterstock.com

They’re so excited, in fact, that investors recently pushed the SPCE share price near its all-time high. Value-focused investors and contrarians might view this enthusiasm as a cause for concern.

After all, the idea is to buy low and sell high, right? Yet sometimes, when significant milestones are being attained, the only direction for a stock is up. In other words, there’s no need to fight against the trend right now with SPCE stock.

As the anticipation builds, a breakout moment could be imminent for SPCE bulls. Schedules might shift and there may be obstacles along the way. Sooner or later, though, Virgin Galactic should achieve its goal of human space-flight for anyone who can afford the admission price.

A Closer Look at SPCE Stock

It’s amazing to consider how far Virgin Galactic and SPCE stock have come. Branson conceived of the idea behind Virgin Galactic way back in 2004, and the stock finally debuted for public trading on Oct. 28, 2019 at $12.34.

I don’t often recommend a long position in a company that’s not generating significant revenues yet. Based on the technical momentum of SPCE stock, however, it’s evident that the bulls are clearly in charge.

November was a terrific month for the owners of SPCE stock. During that month, the buyers bid the share price up from $17 and change to nearly $27.

December started out with equal bullishness. At the close of the markets on Nov. 11, SPCE shares remained above $32. But then, SPCE stock fell below $28 on the morning of Dec. 14, which was good news for folks who wanted to take a position at a more favorable price point.

The history of SPCE stock shows that there’s more room for upward movement. Back in February, SPCE managed to reach a 52-week high of $42.49. If the bulls can eventually break through that level and stay above it, there’s really nothing standing in the way of $50 and then $60.

Charting the Progress

Without a doubt, a pair of encouraging tweets from the company were a contributing factor to the recent run-up in SPCE stock.

The first tweet was issued on Dec. 6. It read, “SpaceShipTwo Unity is mated to our mothership, VMS Eve, as preparations continue for our first spaceflight from Spaceport America, New Mexico.”

Accompanying that tweet was a photograph of a Virgin Galactic spacecraft which, frankly, looks pretty awesome. I would say that this was exactly the kind of update that Virgin Galactic’s stakeholders wanted to see.

Next up, on the morning of Dec. 11, was a tweet with another stunning picture and the following message:

“Good morning from NM. Vehicles and flight crew are ready. Flight window is now open. We will fly no earlier than Saturday. We have range clearance through the weekend and can extend into next week if necessary. Evaluating high-level winds and turbulence. Stay tuned for updates.”

One can only imagine that SPCE investors were in celebration mode upon reading this update.

What Investors Need to See

Yet, the markets will never fail to confound us, as SPCE stock actually closed in the red on Dec. 11. What’s up with that? Shouldn’t the trading community be celebrating the fact that Virgin Galactic could launch a crewed test flight from New Mexico any day now?

It’s impossible to know exactly what the pool of stock traders is thinking at any given moment. However, I suspect that for many investors, SPCE is a “wait and see” kind of stock.

To clarify what I mean, check out Antonio Olmedo’s skeptical reply to Virgin Galactic’s aforementioned Dec. 11 tweet: “… [I] still [don’t] get how you are going to generate substantial revenue[,] even if this flight is a success … hopefully they announce a solid business plan.”

What the SPCE investors need to see, more than progress in the test flights, is substantial revenue generation. There’s simply no substitute for a rock-solid balance sheet.

Moreover, in an update on Dec. 12, Virgin Galactic tweeted an update concerning its weekend test-flight attempt:

“The ignition sequence for the rocket motor did not complete. Vehicle and crew are in great shape. We have several motors ready at Spaceport America. We will check the vehicle and be back to flight soon.”

It’s great to hear that the people involved are okay. Hopefully, the next attempt at a test flight will prove to be successful.

The Bottom Line

I included a cautionary note in this article, as SPCE stock will remain a “show me” story until the revenues come pouring in.

For the time being, though, there’s no denying that the bulls are charging ahead with SPCE stock. Besides, there’s nothing wrong with enjoying a historic moment or two as Virgin Galactic works diligently toward turning space-flight dreams into a reality.

On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article.

David Moadel has provided compelling content – and crossed the occasional line – on behalf of Crush the Street, Market Realist, TalkMarketsFinom 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.


Article printed from InvestorPlace Media, https://investorplace.com/2020/12/gear-up-for-a-historic-test-flight-with-a-long-position-in-spce-stock/.

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