Insiders Are Dumping Virgin Galactic Stock, But We’ve Made the Case for $35 by Summer

What Happened to the SPCE Stock Price Today?

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

Source: Tun Pichitanon / Shutterstock.com

  • Shares of commercial space company Virgin Galactic (NYSE:SPCE) dropped about 8% on Tuesday, continuing what has been a streak of big down days for the stock.
  • From its early February highs, SPCE stock has plunged almost 70%.

Why It Happened

  • Insiders are unloading Virgin Galactic at an alarming pace.
  • First, the VC investor who brought Virgin Galactic public through his SPAC — Chamath Palihapitiya — sold about 40% of his stake in the company for $213 million.
  • Then, the company’s founder and part-owner — billionaire Richard Branson — sold $150 million worth of shares.
  • Now, Cathie Wood and the team over at ARK Invest — a firm known for getting behind companies like Virgin Galactic — sold about $13 million worth of SPCE stock.
  • This rampant insider selling is spooking investors.

Does It Matter?

  • Chamath said he sold because of liquidity constraints, which adds up because Chamath is a VC investor who has been very busy with a bunch of SPAC deals. He publicly claimed he didn’t want to sell, and he still owns 15.75 million shares valued at over $300 million. Not too concerning.
  • Branson sold less than 10% of his stake. Not very meaningful. He still owns 56.8 million shares valued at over $1.1 billion.
  • ARK had been accumulating Virgin Galactic throughout March and April, during which the fund bought about 735,00 shares of SPCE stock. The fund just sold roughly 590,000 shares, so net net, ARK still owns about 140,00 more shares of SPCE stock today than they did a month ago. Unless ARK continues to sell Virgin Galactic stock, we think this move is just some rebalancing and nothing more.
  • Turning to the fundamentals, things look good.
  • The company just unveiled its first SpaceShip III, VSS Imagine, and construction on the second SpaceShip III, VSS Inspire, has already begun. Designs on the new Delta ships — which management believes will be the key to making dozens upon dozens of these commercial spaceships — have also begun.
  • The next test flight is due in May. The company expects to fly Richard Branson into space shortly after that. Subsequently, Virgin Galactic will re-open bookings and make preparations for commercial operations launch in 2022.
  • In anticipation of this rapid ramp, Virgin Galactic has added a flurry of new talent that is well-equipped to take this company from “idea” phase to “service” phase.

SPCE Stock Forecast

  • Our numbers indicate that SPCE stock is dramatically undervalued today.
  • Based on our 10-year DCF model in which we think Virgin will have two spaceports open by 2030 and generating $1 billion in revenue from each, we believe Virgin Galactic’s stock is worth more than $35 today.
  • This agrees with the consensus Wall Street price target on SPCE stock of $37.
  • We believe a successful May test flight will put shares on track toward this number by the end of summer.

Virgin Galactic represents a compelling play on the burgeoning Space Economy — which, in it of itself, may be one of the best investment megatrends of the 2020s.

Investing early in space stocks today, could be like investing early in internet stocks back in the 1990s. That is, space stocks today are on the precipice of enormous growth over the next 10 to 20 years.

There’s an entire economy brewing in space travel, from space tourism to space stations with artificial gravity, and so much more…

SPCE stock is one such explosive stock. But it’s far from the only one making noise in the space economy. Indeed, there actually about a half dozen other space stocks out there, some of which are even better investment opportunities than Virgin Galactic.

Get the names, ticker symbols, and key business details of those world-changing startups by clicking here.

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

By uncovering early investments in hypergrowth industries, Luke Lango puts you on the ground-floor of world-changing megatrends. It’s how his Daily 10X Report has averaged up to a ridiculous 100% return across all recommendations since launching last May. Click here to see how he does it.


Article printed from InvestorPlace Media, https://investorplace.com/hypergrowthinvesting/2021/04/virgin-galactic-stock-the-case-for-spce-35-by-summer/.

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