Virgin Galactic (NYSE:SPCE) flew Richard Branson into space on Sunday in the first commercial passenger space flight ever, and the voyage was very successful. In response to this event, SPCE stock popped about 7% in premarket. However, it quickly reversed course and is now trading down approximately 14% after the company disclosed it would be selling $500 million worth of stock.
That’s a big chunk of stock. And since this is only an $11 billion company, that’s some serious dilution.
But this move also provides Virgin Galactic a significant amount of firepower moving forward. If there was ever a time to raise a whole lot of capital, it’s now.
SPCE Stock Gets Ready to Really Take Off
Overall, Virgin Galactic is flying high after winning their FAA commercial license and successfully flying Branson into space.
The company is now technologically and legally ready to go all-out with manufacturing and marketing, building as many rocket ships as it can and signing up lots of future passengers in the coming months.
Those manufacturing and marketing blitzes will require money — lots of money. And Virgin Galactic is raising that money right now by selling shares.
As a result, we think these funds will go to good use and will meaningfully accelerate Virgin Galactic’s medium-term growth outlook.
Specifically, these funds will allow Virgin Galactic to build more ships, run more commercials, sign up more astronauts and ultimately make more money in 2022 and beyond.
Short-term sentiment aside, we believe SPCE stock is undervalued at $40, especially with this extra investment capital the company has raised. We would be buyers on the dip.
While I can’t say there are many companies in quite the same position as Virgin Galactic, I can say that there are plenty of high-potential companies that are lined up to become leaders of world-changing megatrends. And that’s the secret — find unstoppable innovative megatrends poised to change the world and find promising companies that have what it takes to lead that megatrend.
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In hindsight, it is easy: e-commerce was an emerging megatrend back when Bryant Gumbel was unsure of the “@” symbol’s pronunciation — is it “at,” “about” or “around”? Turns out it was pronounced “Amazon.” Today, it’s incredibly obvious that you should have bought AMZN in 2000, but folks are so scared of innovation because they rarely see it happening… Just like you never notice your kids are getting bigger until they’re already a foot taller… Most people aren’t paying attention to the incremental innovations bringing us closer to the Big Breakthroughs. Then when those breakthroughs draw near, everybody panics. Since innovation disrupts stagnation, which upends years of familiarity (remember typewriters?), it opens up the opportunity for fear mongering.
Why? Fear sells.
But guess what? Innovation investors buy.
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But SPCE is but one of 50 hypergrowth stocks across a smorgasbord of emerging megatrends; Which, like e-commerce in 1999, could score my readers Amazon-like returns many times over
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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 the theme of his premiere technology-focused service, Innovation Investor. To see Luke’s entire lineup of innovative cutting-edge stocks, become a subscriber of Innovation Investor today.
