The space tourism industry is seeing strong movement with billionaires taking flights one after the other. After completing a historic flight on July 11, Virgin Galactic (NYSE:SPCE) beat rivals SpaceX and Blue Origin. The company is already one step ahead in the race and close to commercial operations. However, you wouldn’t know it from the price of SPCE stock. The stock has been down since the successful test flight and has not gained much momentum over the last week.
SPCE stock was trading as high as $52 right before the flight in July, but it came crashing down to a low of $30 today. I strongly believe that Virgin Galactic has a stronghold on the industry and the potential to start commercial operations as scheduled.
This dip is temporary, and I see it as an opportunity to buy. Now let’s move away from the successful test flight and take a look at the investment case for SPCE stock.
Strong Future Prospects
As the space industry continues to evolve with each passing year, tourism opportunities are going to rise. The successful flight by Virgin Galactic is proof that the flight is safe, secure and full of opportunities as they transport humans to space. The company also has a first-mover advantage and is only a few test flights away from starting commercial operations. It plans to start commercial operation as early as 2022.
Although management has been tight-lipped about the next flight, the company’s president, Mike Moses stated that they have three test flights in the series and that they should be done over the summer, as reported by TechCrunch. This is a sign that everything is going as planned and the next test flight could be announced soon.
The company is also planning to increase the flight rate frequency. If they manage to be successful at it, the commercial operations could generate massive revenue. With more flights, the revenue numbers will be soaring.
High Growth Potential
There are not many companies that have the same position and potential as Virgin Galactic yet. They are trying but remain far behind. Until they catch up, Virgin Galactic will continue to lead. Furthermore, SPCE stock may be volatile now, but it is temporary. Market sentiment will change, and the stock will soon gain momentum.
There is always criticism when you attempt something new, but Sir Richard Branson has put an end to all the speculation and proved that the time, money and effort has finally paid off. There are several high-net-worth individuals who are waiting to book their seats on the next flight to space. If you cannot book a seat, take a dip into SPCE stock.
The Bottom Line on SPCE stock
Yes, SPCE stock has come to the ground after the successful test flight and the announcement of raising $500 million by stock sale. But what comes down will also go up. Once the company announces another test flight, it will reflect on the stock and send it higher.
Virgin Galactic has already proved its strength and potential with successful flights, and despite increasing competition in the industry, there is space for all. The company is on the right path to commercial operations, and the money it raises will go toward capital expenditure.
The dilution will give it a push in the industry and the power to move forward. It will only make it easier for the company to schedule flights and fly more people to space.
The groundwork is done. Virgin Galactic has set the stage and is ready to fly higher.
I think SPCE stock will go higher in the future, but you will need patience. At the end of the day, this dip is a great buying opportunity.
On the date of publication, Vandita Jadeja 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.
Vandita Jadeja is a CPA and a freelance financial copywriter who loves to read and write about stocks. She believes in buying and holding for long term gains. Her knowledge of words and numbers helps her write clear stock analysis.