Buying Virgin Galactic Stock Is a No-Brainer After Morgan Stanley’s Downgrade

Morgan Stanley has its reading glasses on and is stuck reading the fine print when it comes to Virgin Galactic’s (NYSE:SPCE) upcoming “downtime.” It recently downgraded SPCE stock to “Underweight” and maintained a $25 price target.

But, when it comes to investing in revolutionary companies like Virgin Galactic, the usual tactics don’t always work as well as they do for more traditional companies.

The reason behind Morgan Stanley’s downgrade is the fact that Virgin Galactic’s only mothership will be “grounded” for the next eight months.

The reason for the grounding, however, isn’t a bad reason at all. Virgin Galactic plans to implement upgrades to the mothership post-successful launch.

So, despite taking a pause from commercial, revenue-generating flights for the time being, Virgin Galactic is really just doing everything in its power to ramp things up internally as effectively as possible.

And the $500 million in stock Virgin filed to sell after its first flight should help fuel this infrastructure upgrading period.

The Bottom Line on SPCE Stock

In the grand scheme of things, is eight months really that long of a waiting period? We don’t think so — great things take more time than most investors are willing to wait.

Especially because, once its time for Virgin Galactic to spread its wings again … It won’t stop.

After Virgin’s brief hiatus, we expect to see at least one commercial spaceflight per quarter through the end of 2022, if not more.

What it comes down to is this: Virgin is essentially sitting at zero today. But soon enough, there will be a huge acceleration in catalysts.

Buying when there are catalysts and selling when there is downtime is a trading strategy. But long-term investors don’t care about that stuff. What they’re looking for, on the other hand, is Virgin Galactic creating a high-demand, very profitable space tourism business that will one day be worth tens of billions of dollars.

Downtime in 2021 or 2022 doesn’t impact that long-term picture.

That’s why we can’t recommend buying this sub-$30 dip enough. Virgin Galactic’s behind-the-scenes upgrades over the next eight months will bring both Virgin and SPCE stock to new heights.

Many of the stocks I cover in my premium newsletter advisory service, Innovation Investor, are as exciting or more exciting than SPCE stock.

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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.


Article printed from InvestorPlace Media, https://investorplace.com/hypergrowthinvesting/2021/08/buying-spce-stock-is-a-no-brainer-after-morgan-stanleys-downgrade/.

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