$SPCE The Potential Of Space TourismAfter two years without launching a spaceflight, Virgin Galactic Holdings, Inc. (NYSE: SPCE) is set to have its first flight since 2021 later this month as a test run before its first upcoming commercial as mentioned in its latest earnings call. Moreover, SPCE has stated its goals for the under-development delta class spaceships moving forward, which would supposedly bring in a slew of revenues for the company. With SPCE having a high short interest, SPCE stock could be a considerable short squeeze play.
SPCE Fundamentals
Breaking out of the 50 MA on the daily chart, SPCE could be witnessing a shift in trend as a result of the company’s recent updates regarding its first commercial spaceflight. SPCE recently stated during its earnings call that it is launching its Unity 25 crew later into space this month which is the company’s first flight in two years to perform a final assessment before launching its first commercial flight Galactic 01 at the end of June. With this in mind, SPCE stock could soar if its first commercial flight proves successful.
Using its 6-seated VSS Unity vehicle, SPCE will be able to launch 6 passengers during its first commercial flight next month at a ticket price of $450,000 per passenger, which translates into $2.7 million in revenues per flight. With a relatively low variable cost of approximately $400,000 per flight, SPCE is set to capitalize on massive profits at around $2.3 million per flight which could bring the company closer to profitability. As SPCE expects one flight per month from its Unity vehicle, the company would generate a revenue of $8.1 million per quarter and a revenue of $32.4 million per year.
Aside from starting commercial flights being one of SPCE’s main goals this year, the company aims to complete designs for the under-development delta class spaceships alongside building the required tooling and beginning the parts fabrication for the ships. Moving into 2024, SPCE expects to continue parts fabrication while anticipating the assembly phase to begin. Finally, SPCE expects to start testing the vehicles in 2025 and launch its first commercial delta vehicle flight in 2026. SPCE’s CEO, Michael Colglazier stated that the Delta class spaceships will be the key driver of revenue growth and profitability for the company over the long term. Based on this, SPCE could be an exceptional long-term investment.
SPCE currently has a high short interest sitting around 23.75%, while also having 43.68% free float on loan and 100% utilization. If SPCE’s first commercial flight ends up a success, SPCE stock could witness a short squeeze during the next month.
SPCE Financials
In its Q1 2023 earnings report, SPCE reported $1 billion in assets, including $415.6 million in cash and equivalents. SPCE witnessed a decline in its assets from $1.1 billion, however, its cash and equivalents grew from $302.2 million in Q4 2022. SPCE’s liabilities grew QoQ from $659.7 million to $666.7 million as its current liabilities increased from $184 million to $190.8 million while its long-term liabilities increased from $475.6 million to $475.9 million.
For the three months ended March 31, SPCE revenues grew YoY from $319 thousand to $392 thousand, while its operating loss widened from $91.3 million to $163.7 million as its Research and development costs increased from $51.8 million to $109.8 million. Finally, SPCE’s net loss also widened YoY from $93 million to $159.3 million.
Technical Analysis
SPCE stock trend is neutral as it is currently trading in a sideways channel between the support at $3.11 and the resistance at $4.19
Looking at the indicators, SPCE stock is currently trading above the 21 MA, 50 MA and 200 MA which is a bullish sign. The RSI is approaching overbought at 61 and the MACD is bearish.
Fundamentally, SPCE’s most recent catalyst was its Q1 earnings, while it has an upcoming catalyst which is the company’s first commercial spaceflight at the end of June, however, the company didn’t specify a date.
SPCE stock price is expected to rise in June in light of the company’s first commercial flight. A possible play is to go long ahead of the company’s upcoming commercial flight. An entry point would be to wait for confirmation if the stock breaks out of its channel as it has tested its resistance multiple times as of late, taking profits along the way on testing the $5.59 resistance and the $6.35 resistance.
SPCE Forecast
As SPCE is set to launch its first spaceflight in two years which is a final assessment before its first commercial flight in June, the company could gain a good deal of revenues moving forward. With the company continuing its efforts on manufacturing the delta class spaceships, SPCE’s revenues could grow even more by 2026 when it is commercialized while also reaching profitability making the stock an astounding long-term investment. Based on these reasons, in addition to having a high short interest, SPCE could be an exceptional short squeeze play.
