Virgin Galactic Needs to Nail Its Test Schedule to Stay Relevant

Shares of space-tourism company Virgin Galactic (NYSE:SPCE) were up more than 20% in the first week of February. The company has provided a positive update on its test flight window, which opens up on Feb. 13 of this month. Investors were anxiously waiting for the news after the company aborted its test flight of the SpaceShipTwo Unity in December. SPCE stock has more than recovered all its losses, gaining heavily from the recent Reddit-induced short squeeze. Investors will be keenly following the developments in its test flight schedule, but it appears that Virgin Galactic is back on track.

Virgin Galactic (SPCE) billboard on the New York Stock Exchange, across from the Fearless Girl statue. aerospace stocks

Source: Tun Pichitanon / Shutterstock.com

SPCE is pre-revenue, but the massive hype surrounding it has boosted the stock to remarkable highs. Price metrics are off the charts, but are largely irrelevant considering the space-tourism business’s enormous potential.

The company has already sold 600 tickets, priced at $200,000-$250,000. That is $135 million in ticket sales already. Once the company is up and running, one can only imagine how much revenue it could generate.

However, the next few months are critical for the company in boosting their shareholders’ and customers’ confidence. Lets dive a little deeper into the details of its test schedule.

Test Flight Window Updates

Investors were let down by Virgin’s failed test flight in December, which subsequently triggered a sell-off. Since then, the company has been working hard to ensure its test-flights live up to its stakeholders’ expectations.

It recently announced that its test-flight window would open up in mid-February, depending on weather conditions and technical elements.

Pre-flight preparations are already underway, with safety procedures as a top priority. Most recently, the company announced back-to-back successful test flights of its VMS Eve “mothership” aircraft. However, the VMS Eve is essentially the spaceplane carrier, which left investors disappointed. These test flights are for pilot efficiency training and usually precede test flights of the spaceplane itself, the VSS Unity.

One of the upcoming tests’ key objectives will be to test out the remedial work that has been underway since December. Management believes that it has wrapped up the root cause analysis, and corrective work is now underway in full swing. The next step is naturally to test this out in real-time during a rocket-powered flight.

These upcoming test flights hold paramount importance to the company and its shareholders after the setback in December. Its all-civilian trip, including its founder Sir Richard Branson, was initially targeted for the first quarter this year, but had to be pushed back. If everything goes well, we could see that trip taking place in the third or fourth quarter this year.

Not a Novelty Anymore

Many considered SPCE stock the only noteworthy investment option in this infant industry. That seems to be changing, with a couple of new names making the rounds in the past few weeks.

First, there’s rocket start-up company, Astra, planning to go public in a $2.1 billion deal with blank-check company Holicity (NASDAQ:HOL).

Additionally, special purpose acquisition company (SPAC) Stable Road Acquisition (NASDAQ:SRAC) plans to merge with Momentus, which offers in-space transportation services.

Moreover, you also have SpaceMobile, the first space-based network that plans to go public via New Providence Acquisition Corp (NASDAQ:NPA).

It will be fascinating to see how investors take up these stocks once they complete their mergers. However, these companies, including Virgin Galactic, have to perform to stay relevant. At this point, with a strong liquidity position, Virgin has the best chance of making significant inroads in the space-tourism industry.

Final Word on SPCE Stock

SPCE stock was in a bit of a lull for the past couple of months after its failed test flight back in December. However, things are moving in the right direction as the company has provided an updated test-flight schedule. It has been working hard to ensure that these tests go smoothly and move closer to launching its first all-civilian flight. Investors will be keenly following the developments in the next few weeks with SPCE stock and place their bets accordingly.

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


Article printed from InvestorPlace Media, https://investorplace.com/2021/02/spce-stock-virgin-galactic-needs-to-nail-its-test-schedule-to-stay-relevant/.

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