Virgin Galactic (NYSE:SPCE) stock is on the move today, as the company announced that it is ready to launch its first-ever commercial spaceflight tomorrow. At the time of this writing, shares of SPCE are up more than 10% on the news, as investors appear to be pricing in positive results from the suborbital flight to the edge of space.
The flight will bring an aerospace engineer and two Italian Air Force offers into sub-orbit in a flight that was planned in 2022. This flight comes approximately two years following the inaugural test flight of Virgin’s Unity plane, which featured Sir Richard Branson among the crew members.
Regularly planned commercial space flights were expected to be live last year, given the success of the initial test flight. However, a series of delays, which included a grounding of Virgin’s plane and an investigation into its operations by federal regulators, halted such plans. That said, a successful manned test flight in May paved the way for this announcement, which has already begun to be priced into SPCE stock in recent trading sessions.
Let’s dive into whether this is a stock to consider buying, given its momentum right now.
Is SPCE Stock Worth a Buy Right Now?
I, for one, am certainly hopeful that commercial space flights will go mainstream. This is a sector that has been fraught with issues in recent years and despite initial hype around the potential growth that companies like Virgin Galactic can provide, it’s clear that profitability may be a long way’s out.
That said, a marathon starts with the first step. And if Virgin Galactic can show some revenue and a growth path to profitability, perhaps this is a stock that long-term investors will become intrigued by.
There are certainly plenty of speculative stocks in this market with higher valuations and business models that are comparatively worse. Everything is relative — and given the rising tide among growth stocks in recent weeks, perhaps this is a momentum play to consider.
That said, we’ve all seen how sentiment and macro conditions can affect valuations. If we are indeed headed into a recession, buying into an ultra-luxury service company may not be a great move. Of course, the spending patterns of billionaires may be less-affected by recessions (they usually are). But all else equal, SPCE stock will be held to similar valuation standards as its speculative growth stock peers.
Thus, this company remains a risky bet, although it appears to be one with some upside momentum.
On the date of publication, Chris MacDonald did not hold (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.
