Virgin Galactic Holdings, Inc.

SPCE Details

Q1FY21 Results Update: Virgin Galactic Holdings, Inc. (NYSE: SPCE) is a vertically integrated aerospace and space travel company. The market capitalization of the company as on 11 May 2021 stood at ~$4.29 billion. As per a recent update, the company has announced its results for the first quarter of FY21 and reported adjusted EBITDA at negative $56 million. The net loss narrowed down to $130 million during the period, compared to a loss of $377 million in the previous corresponding period. It ended the period with a comfortable cash position of $617 million as of 31 March 2021. The total future astronauts remained at approximately 600 during the same period end.

Q1FY21 Financial Performance (Source: Company Reports)

Key Risks: The company is a technology-focused company and is capital intensive in nature, given its line of operations. Therefore, it has to look ways for to generate revenue from its operations in order to sustain its business.

Outlook: The company is committed to deliver one of the most unique and transformational customer experiences, with safety in view. It has introduced the VSS imagine during Q1FY21, which is the first SpaceShip III class vehicle in the company’s fleet. It has also announced a three-year extension to the global Land Rover partnership. It has also completed the corrective EMI work on VSS Unity and is enabling the spaceship to be ready for pre-flight procedures. However, the company has been suffering ongoing setbacks and delays in its business and operations due to COVID-19 virus outbreak, which caused accumulated impacts on both schedule and cost-efficacy. This trend is expected to continue in FY21 as well. Subsequently, it might negatively impact the company’s financial performance in the days ahead.

Stock Recommendation: In view of building the senior management team, the company has appointed Doug Ahrens as Chief Financial Officer and Stephen Justice as Vice President of Engineering, effective 01 March 2021. The stock of SPCE is trading below its average 52-weeks’ levels of $62.80-$14.21. The stock of SPCE gave a negative return of ~11.48% in the past six months and a negative return of ~12.88% in the past one week. On a technical analysis front, the stock of SPCE has a support level of ~$14.13 and a resistance level of ~$23.67. Considering the and current trading levels, narrowing of net losses, decent cash position and unveiling of VSS Imagine during Q1FY21, we recommend a ‘Hold’ rating on the stock at the current market price of $18.12, up by ~0.95% as on May 11, 2021.

SPCE Daily Technical Chart (Source: Refinitiv, Thomson Reuters)

Note: Investment decision should be made depending on the investors’ appetite on upside potential, risks, holding duration, and any previous holdings. Investors can consider exiting from the stock if the Target Price mentioned as per the Valuation has been achieved and subject to the factors discussed above.

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