Virgin Galactic’s Stock Price Plummets After Company Delays Next Space Flight

The shares of Virgin Galactic are down by 2% at Monday’s pre-market trading session after the company delayed its first commercial space flight due to some component defects.

Virgin Galactic Delays Its Next Space Flight

Virgin Galactic has announced the delay of its next space flight due to some technical reasons. According to the company, the next SpaceShipTwo suborbital flight has been delayed as the engineers check a potential issue.

The company said an unidentified third-party supplier notified it of a potential manufacturing defect in the flight control actuation system component. The space flight company added that it is currently conducting inspections with the vendor to ascertain if the suspected component needs to be repaired or replaced.

Due to the ongoing inspections, Virgin Galactic has stated that it has shifted its next SpaceShipTwo mission until the middle of October. The company was supposed to launch the next SpaceShipTwo mission by the end of this month or early October. However, the trip has been delayed for at least two weeks now.

Virgin Galactic pointed out that the suspected issue is not related to the incident linked to the previous SpaceShipTwo flight on July 11. The FAA had earlier pointed out that it wouldn’t allow SpaceShipTwo flight to fly again until it had completed an investigation into an incident earlier this year. The incident saw the vehicle fly outside of its designated airspace during its move back to the runway at Spaceport America in New Mexico.

Virgin Galactic’s Stock Price Down By 2%

The shares of Virgin Galactic have been down by 2% over the past few hours. The delay of its next space flight is the major reason why the company’s stock price has slightly retraced during Monday’s pre-trading session.

SPCE stock chart. Source: FXEMPIRE

With the US stock market set to open in a few hours, SPCE could experience further decline. At the time of writing, SPCE is trading at $25.16 per share. Year-to-date, the company’s stock performance has been almost stagnant. SPCE was trading at $23.23 at the start of the year, and it is now trading at $25.16, up by less than 1% over the past nine months.

Why Virgin Galactic Stock Is Down By 7% Today

Virgin Galactic Stock Falls As FAA Does Not Allow SpaceShipTwo To Fly Until Investigation Report Is Approved

Shares of Virgin Galactic found themselves under pressure after U.S. Federal Aviation Administration (FAA) did not allow SpaceShipTwo to fly until it approved the final mishap investigation report. FAA is investigating the deviation from the course during the decent of Virgin Galactic’s flight which carried Richard Branson into space back in July.

This is a material setback for the company as Virgin Galactic planned to launch its first commercial research mission with Italian Air Force crew members onboard in late September or early October 2021. This mission would not be possible until FAA approves the investigation report.

What’s Next For Virgin Galactic Stock?

Virgin Galactic stock has been under pressure since late June when it made an attempt to settle above the $57 level. Currently, the stock is trying to move below the $24 level, so Virgin Galactic lost more than half of its market capitalization in just several months.

Analysts expect that Virgin Galactic will report a loss of $1.5 per share in 2021 and a loss of $0.96 per share in 2022. Analyst estimates have been moving lower in recent weeks, and they may be lowered after the new developments.

It is not clear how much time would be needed to complete the investigation report and when FAA will allow Virgin Galactic to fly again, but this delay will surely serve as a negative catalyst for the company’s stock.

It remains to be seen whether the recent pullback will attract speculative traders as the stock may lack upside catalysts for some time until the company is allowed to fly again. It should be noted that big price swings are usual for Virgin Galactic stock, so traders should be prepared to deal with volatility in case they choose to bet on the company’s shares after the pullback.

For a look at all of today’s economic events, check out our economic calendar.

Virgin Galactic Shares Tumble After Billionaire Branson’s Selling Spree

Virgin Galactic shares came under pressure on Friday, falling 2% to just over USD 25 per share. For the week, the stock has shaved off nearly one-third of its value.

Founder Richard Branson via Virgin Investments cashed in more than 10 million shares in recent days, raking in USD 300 million in the interim. Branson’s share sale comes weeks after Virgin Galactic completed its maiden spaceflight with a full crew including the billionaire himself.

According to reports, Branson plans to direct the proceeds from the share sale toward the company’s languishing leisure and travel units, which are still dealing with the fallout from COVID-19. In addition, the funds will go toward other ventures, including those that are new or already established.

Branson hasn’t totally cashed out of Virgin Galactic and still owns more than 46 million shares, which at the current share price is worth more than USD 1 billion. Nonetheless, Branson has been on somewhat of a selling spree and also unloaded more than USD 150 million worth of shares in the spring, when the stock was trading in a similar range.

Wall Street Wallop

Virgin Galactic generated a great deal of hype in early July around the time of the fully crewed space mission. During that phase, Virgin Galactic shares were trading in the mid-to-high USD 50s range, but the excitement didn’t last, and shares have since been roughly halved. Investors have clearly moved on, if only for the time being.

For the next couple of months, Virgin Galactic will be focused on maintenance, which is less exciting for Wall Street. As a result, a string of analyst downgrades has hit the stock, which hasn’t helped the sentiment around shares. Morgan Stanely lowered its rating from equal weight to under weight, citing an expected pullback in the stock as the excitement from the historic mission begins to fade.

Credit Suisse also lowered its rating on the stock given that there is not much to look forward to for the foreseeable future. Once Virgin Galactic ramps up for its next space mission, Wall Street firms could flip from sour to positive on the stock.

Virgin Galactic has ambitious plans for frequent spaceflights that could generate billions of dollars in revenue each year, depending on the number of spaceports the company builds. If they pull it off, it could help the long-term performance of the stock.

Richard Branson Liquidates $300 Million Worth Of Virgin Galactic Shares, Stock Price Dips

The shares of Virgin Galactic are down by roughly 2% today after the founder Richard Branson sold $300 million worth of his stake in the company.

Richard Branson sells $300 million worth of his shares in Virgin Galactic

The founder of Virgin Galactic, Sir Richard Branson, has sold some of his stake in the space company as he looks to fund other ventures. This latest development comes as another shock for the company, with its stock price dropping by roughly 2% today.

The founder sold 10.4 million shares of Virgin Galactic over the course of this week. He sold the stocks at varying prices, ranging from 25.75 to $34.39 per share. Overall, the shares he sold were worth roughly $300 million.

This latest development comes just days after Virgin Galactic’s stock was downgraded by Morgan Stanley. The stock was previously rated as an equal weight, but it is now rated as underweight. According to Morgan Stanley, the excitement around the company should decrease since it doesn’t have any scheduled flights for a while.

Despite Branson selling $300 million worth of his stake in Virgin Galactic, the parent company said the Virgin Group remains the largest single shareholder in Virgin Galactic. The stakes sold in the company would be used to invest in Branson’s other ventures, especially in leisure, holiday and travel businesses that are still affected by the impact of the COVID-19 pandemic.

Virgin Galactic’s Stock Price Dips Following Announcement

The shares of Virgin Galactic dropped by nearly 3% following the announcement that Branson has sold some of his stake in the company. It dropped below the $23 mark earlier today. However, the stock price is slowly recovering, and it is now trading close to the $26 region.

SPCE stock chart. Source: FXEMPIRE

Virgin Galactic’s shares soared last month after the founder Branson went to space for the first time since the company was established. Branson became the first billionaire to make the trip, with Jeff Bezos following suit a few days later.

Today’s Market Wrap Up and a Glimpse Into Friday

Stocks are on the comeback trail. All three of the major indices finished the day in the green, with the Dow Jones Industrial Average adding more than 270 points. The rally comes on the heels of Wednesday’s market sell-off in which the Dow shed more than 300 points.

The S&P 500 and tech-heavy Nasdaq also retook some recently lost ground on Thursday and closed at fresh all-time highs. Investors are easing back into stocks after learning that weekly jobless claims are on the decline, which is a good sign for the labor market.

Stocks to Watch

Robinhood shares fell more than 27% in the regular session after the company revealed in a filing that early investors are poised to sell close to 100 million shares. Robinhood’s pain was meme stocks’ gain. GameStop and AMC Entertainment advanced 4% and 12%, respectively.

Shares of Virgin Galactic are rocketing higher by more than 5% in the after-hours market. Billionaire Richard Branson’s company revealed that it would begin selling tickets for spaceflights at USD 450K a pop, which should jumpstart revenues. In Q2, Virgin Galactic, which is not yet profitable, reported that it has a “revenue-generating flight” planned for late September.

Shares of Zymergen, a biology-focused company, skyrocketed 75% in the regular session and are up another 10% in extended-hours trading. Zymergen’s gains come on the heels of a recent management shakeup and a poor revenue outlook that triggered a sell-off in the stock earlier this week. Now Zymergen has made its way onto Cathie Wood’s radar and into one of ARK Investment’s funds. ARK Investments is also a Tesla bull.

President Biden is looking to make an electric vehicle push in the U.S., but the administration failed to include Tesla CEO Elon Musk in the plans. Tesla is the biggest EV manufacturer in the country. Musk had a good sense of humor about it and seemed to laugh it off.

Source: Twitter

Look Ahead

All eyes will be on the employment report for July, which comes out on Friday morning. Wells Fargo economists expect that 865,000 jobs were added to the economy last month. Stock index futures are treading lightly ahead of the employment report and are little changed in after-hours trading.

What You Need to Know about SPACs – Wall Street’s Hottest Trend

Recently, U.S cryptocurrency exchange “Bullish” announced it is aiming for a $9 billion listing on the New York Stock Exchange via a merger with Far Peak Acquisition Corporation, a special purpose acquisition company (SPAC).

While many were focusing on what this transaction will mean to the crypto industry, others were asking, what is a SPAC and why should I learn about it? Still, others want to know if it’s an investment strategy that’s here to stay or another Wall Street fad.

What is a Special Purpose Acquisition Company (SPAC)?

According to most legal sources, a special purpose acquisition company (SPAC) is a company with no commercial operations that is formed strictly to raise capital through an initial public offering (IPO) for the purpose of acquiring an existing company.

SPACs aren’t new. They have been around for decades, but have recently become more popular because low yields have driven investors to seek alternative ways to increase their capital. Not only have they become popular with sophisticated, high-wealth individuals, but they have also drawn the attention of underwriters who envision a big payday in the form of commissions and fees.

SPAC IPOs have seen a resurgent interest since 2014, with increasing amounts of capital flowing to them.

  • 2014:  $1.8 billion across 12 SPAC IPOs
  • 2015:  $3.9 billion across 20 SPAC IPOs
  • 2016:  $3.5 billion across 13 SPAC IPOs
  • 2017:  $10.1 billion across 34 SPAC IPOs
  • 2018:  $10.7 billion across 46 SPAC IPOs
  • 2019:  $13.6 billion across 59 SPAC IPOs
  • 2020:  $83.3 billion across 248 SPAC IPO

How is a SPAC Formed?

A SPAC is created, or sponsored, by a team of institutional investors, Wall Street professionals from the world of private equity or hedge funds. They create this entity that has no commercial operations. It makes no products and does not sell anything. In fact, the SPAC’s only assets are typically the money raised in its own IPO, according to the Security and Exchange Commission (SEC).

What’s interesting about a SPAC is that when it raises money, the investors buying into its IPO do not know what the eventual acquisition target company will be. That’s part of its mystique, however, since institutional investors with track records of success can more easily convince other investors to invest in the unknown. Due to this, a SPAC is also often called a “blank check company.”

How Does a SPAC Operate?

After the SPAC is legally created, it now needs cash to create the capital needed to do the acquiring of another company, for example, in the future. Remember, the SPAC is not going to raise money to buy equipment, computers, software, or even pay rent. It needs the money to buy what is often referred to as the “eventual acquisition target company”.

A SPAC will raise the money it needs through its own IPO. CNBC says that SPAC IPOs are usually priced at $10 a share. Once the initial capital is raised, the money goes into an interest-bearing trust account until the SPAC’s founders or management team finds a private company looking to go public through an acquisition.

Legal experts say that once an acquisition is completed (with SPAC shareholders voting to approve the deal), the SPAC’s investors can either swap their shares for shares of the merged company or redeem their SPAC shares to get back their original investment, plus the interest accrued while that money was in trust. The SPAC sponsors typically get about 20% stake in the final, merged company.

Time is of the Essence

Once SPAC sponsors raise the capital they need to go to work acquiring companies, they can’t sit on the funds forever, even if they are protected by trust and earning interest. SPAC sponsors also have a deadline by which they have to find a suitable deal, typically within about two years of the IPO. Otherwise, the SPAC is liquidated and investors get their money back with interest.

What are the Advantages of a SPAC and Who Benefits?

Owners of smaller companies find selling to a SPAC more profitable because the sale often adds about 20% to the price of the deal compared to a typical private equity deal. Additionally, being acquired by a SPAC can also offer business owners what is essentially a faster IPO process under the guidance of an experienced partner, with less worry about the swings in broader market sentiment.

Business owners are often worried about extreme market volatility or the fear that weak investor sentiment could force the postponement of an IPO. By dealing directly with the SPAC, these worries are essentially eliminated.

Furthermore, a deal with a SPAC can be wrapped up in just a few months versus the traditional process of registering an IPO with the SEC, which can take up to six months.

Basically, the key advantage is a business owner can get his money faster and without a lot of government tape.

Are There Any Pitfalls?

Nothing is guaranteed and SPACs are no exception to that rule. Although they are extremely popular in 2021 for large institutional investors and other billionaire backers, this trend can go away quickly if “something better” comes along.

Other factors that could determine its long-term popularity include the fact that target companies run the risk of having their acquisition rejected by SPAC shareholders. Even the rich get cold feet about a deal. Furthermore, investors are literally going blindly into the investment.

SPACs will probably retain their popularity until the major players decide to let the smaller investors into the game. That’s usually when the rules change and the government regulations get tougher in order to protect undercapitalized investors from losing all their money.

What are Some High-Profile Examples of SPACs?

We don’t know yet how the SPAC for Bullish will play out because it was just announced. But since it involves cryptocurrencies, it will probably become a profitable venture since investors looking to get aboard the craze have been throwing money at the asset class.

High-profile SPACs like DraftKings and Virgin Galactic have performed well for investors, but that hasn’t always been the case with average returns from SPAC mergers completed between 2015 and 2020 falling short of the average post-market return for investors from an IPO.

A noted prominent short-seller of SPACs said, “a business model that incentivizes promoters to do something – anything – with other people’s money is bound to lead to significant value destruction on occasion.”

Like any investment, it pays to do your homework before putting money into a SPAC.

Today’s Market Wrap Up and a Glimpse Into Tuesday

The S&P 500 notched another all-time high today as stocks extended Friday’s gains. Tesla was a big winner as CEO Elon Musk took the spotlight. Investors are also optimistic about the second-quarter earnings season, which will feature a couple of big banks on Tuesday.

The Dow Jones Industrial Average tacked on more than 100 points in the session, closing just below the 35,000 threshold, while the tech-heavy Nasdaq was fractionally higher.

Stocks to Watch

Financial stocks JPMorgan and Goldman Sachs will both report their quarterly results on Tuesday before the bell. Investors sent both stocks higher on Monday, with JPMorgan and Goldman up more than 1% and 2%, respectively. Banks have been flexing their strong balance sheets this year and the second quarter is unlikely to be any different.

Disney was a big gainer on the day, advancing by 4%. Investors cheered the fact that the company will raise the price for ESPN+ monthly subscriptions by USD 1 to USD 6.99, effective in August. The price increase bolsters the annual subscription rate to USD 69.99 while the price for the bundle that includes ESPN+, Disney + and Hulu will stay the same. Disney’s ESPN+ boasts nearly 14 million subscribers.

Tesla similarly gained more than 4% in the trading session. Elon Musk was in court to stick up for the electric vehicle company’s decision to scoop up SolarCity in a USD 2.6 billion deal half-a-decade ago. Shareholders allege in a lawsuit that the deal was a bailout of the solar company, which Musk vehemently denies. If things don’t go Musk’s way in court, he could be on the hook for USD 2 billion.

Virgin Galactic on Sunday had a successful spaceflight with founder Richard Branson on board, but the stock took it on the chin today. The company revealed its plans to issue as much as USD 500 million in stock, which sent shares tumbling more than 17% to barely holding onto USD 40.

Look Ahead

If anything can cause the stock market rally to stumble, it could be further signs of inflation. That’s why investors will be paying close attention to the Consumer Price Index data for June that will be released on Tuesday morning. Wells Fargo is predicting a 0.6% increase.

On the earnings front, in addition to financial stocks, consumer staple company PepsiCo will also be reporting second-quarter earnings on Tuesday.

Tesla Lifts Wall Street to Close at Record Highs

The S&P 500 financials, communication services and real estate sector indexes each gained more than 0.8%.

Tesla rallied over 4% and was the top contributor to gains in the S&P 500 and Nasdaq. CEO Elon Musk insisted in court on Monday he does not control Tesla, and he said he did not enjoy being the electric vehicle company’s chief executive as he took the stand to defend the company’s 2016 acquisition of SolarCity.

The S&P 500 banks index climbed 1.3% ahead of quarterly earnings reports this week from major banks, including Goldman Sachs and JPMorgan on Tuesday. JPMorgan Chase rose over 1% and Goldman Sachs rallied more than 2%, fueling the Dow’s gains.

Investors will closely watch quarterly reports for early clues on the how long the U.S. economic recovery may last, with June-quarter earnings per share for S&P 500 companies expected to rise 66%, according to IBES data from Refinitiv.

The S&P 500 has rallied about 17% so far this year, with some investors questioning how long Wall Street’s rally may last and concerned about a potential downturn.

“Earnings season is going to be warmly greeted as an opportunity for existing biases to be confirmed,” warned Mike Zigmont, head of trading and research at Harvest Volatility Management in New York. “Even if forecasts are not as rosy as what the most bullish had hoped, it’s all going to get rationalized away.”

Focus this week will also be on a series of economic reports, including headline U.S. inflation data and retail sales. As well, Federal Reserve Chair Jerome Powell is due to appear before Congress on Wednesday and Thursday for views on inflation.

Investors have been concerned about higher inflation and the spread of the Delta coronavirus variant in the past few sessions, with traders seesawing between a preference for economy linked-value stocks and tech-heavy growth names.

The Dow Jones Industrial Average rose 0.36% to end at 34,996.18 points, while the S&P 500 gained 0.35% to 4,384.63.

The Nasdaq Composite climbed 0.21% to 14,733.24.

All three closed at their highest levels ever.

Walt Disney jumped over 4% to a two-month high after it and Marvel’s “Black Widow” superhero movie took in $80 million in its first weekend. And the entertainment company plans to raise prices for its ESPN Plus streaming service.

Didi Global Inc dropped about 7% after it confirmed China’s cyberspace administration notified app stores to remove the ride-hailing company’s 25 apps and said the move could impact its revenue in the region.

Virgin Galactic Holdings tumbled 17% after the space tourism company said it may sell up to $500 million worth of shares, a day after the company completed its first fully crewed test flight into space with billionaire founder Richard Branson on board.

Volume on U.S. exchanges was 8.3 billion shares, compared with the 10.5 billion average for the full session over the last 20 trading days.

Advancing issues outnumbered declining ones on the NYSE by a 1.43-to-1 ratio; on Nasdaq, a 1.11-to-1 ratio favored advancers.

The S&P 500 posted 66 new 52-week highs and no new lows; the Nasdaq Composite recorded 85 new highs and 38 new lows.

For a look at all of today’s economic events, check out our economic calendar.

(Additional reporting by Devik Jain and Shreyashi Sanyal in Bengaluru; Editing by Maju Samuel and Cynthia Osterman)

Why Virgin Galactic Stock Is Down By 12% Today

Virgin Galactic Shares Retreat As Company Reveals Plans To Sell Up To $500 Million Of Common Stock

Shares of Virgin Galactic are under pressure today despite the success of the mission which took the company’s founder Richard Branson into space.

Virgin Galactic has recently disclosed that it entered into a distribution agreement with several financial firms relating to the sale of up to $500 million of common stock.

At current price of about $43 per share, Virgin Galactic may sell about 11.6 million shares. At the end of the first quarter of this year, Virgin Galactic had roughly 237 million shares.

What’s Next For Virgin Galactic Stock?

It is not surprising to see that Virgin Galactic decided to use the favorable moment to issue more stock in order to finance its operations.

The company’s current order backlog is about $150 million which is clearly not sufficient enough to expand its business.

Without growth, Virgin Galactic shares will quickly fall back to modest levels as the company’s market capitalization exceeds $10 billion even after the recent pullback.

The market is looking beyond near-term financials as traders bet that the space travel industry will grow at a very fast pace while other revenue streams will be added in the future.

While market’s optimism is strong and traders look ready to bet on high-growth companies regardless of their valuation, the stock may face additional pressure in the near term as traders take profits after the rally which took the stock from the $15 level in May to levels in the $40 – $57.50 range.

I’d also note that the stock may lack near-term upside catalysts after Branson’s successful flight, which may also serve as a negative factor for the stock which is dependent on media buzz due to its sky-high valuation.

For a look at all of today’s economic events, check out our economic calendar.

Richard Branson Went To Space. Virgin Galactic Shares Up By 9%

The shares of Virgin rallied by over 9% during the pre-market trading session today after Richard Branson completed a test flight to space yesterday.

Branson Completes Long-Awaited Space Flight Test

The CEO of Virgin Galactic, Sir Richard Branson, completed his first test flight to space yesterday. This is the first time the billionaire is making the trip to space after roughly 17 years of development and over a billion dollars invested in the company.

By completing the test flight to space, Branson became the first billionaire space company founder to do so, beating the likes of Jeff Bezos and Elon Musk. Branson followed Virgin Galactic’s spacecraft VSS Unity, which took off above the skies of New Mexico on Sunday.

Following the flight, Branson said, “We’re here to make space more accessible to all at all. The mission statement that I wrote inside my spacesuit was to turn the dream of space travel into a reality for my grandchildren and for many people who are alive today, for everybody.”

The VSS Unity is designed to hold two pilots and six passengers. The company now has roughly 600 reservations for tickets on future flights, with each ticket sold between $200,000 and $250,000.

Space Flight Pushes Virgin Galactic’s Shares Higher

The shares of Virgin Galactic surged by nearly 10% earlier today following the success of the Branson-led space flight. The stock price rose as high as $51 per share earlier today during the pre-market trading session.

SPCE stock chart. Source: FXEMPIRE

However, the Virgin Galactic’s rally has cooled down, and the stock is now trading just above the $49 mark. The company is expected to make three more spaceflights before the end of the year.

With Virgin Galactic’s share price rallying following, investors could expect Amazon’s stock price to increase once Jeff Bezos goes to space with his Blue Origin company. Bezos is expected to make the trip on July 20, less than ten days after Richard Branson.

Stocks Poised to Extend Gains Ahead of Earnings Parade

It’s hard to keep stocks down in this bull market. After tumbling on Thursday, the major indices came back with a vengeance on Friday to finish the week at record levels. Investors had shown concern about the economic recovery hitting a stumbling block, but their fears didn’t last.

On Friday, the S&P 500, Dow Jones Industrial Average and Nasdaq all finished the day at fresh all-time highs. Bank stocks reclaimed lost ground from Thursday’s sell-off while travel stocks including airlines also made a quick turnaround.

Trading in stock index futures suggests that Monday will extend Friday’s gains. On Sunday evening, the S&P 500, Dow and Nasdaq index futures were all trading fractionally higher.

Stocks to Watch

The second-quarter earnings parade will begin in earnest this week on Tuesday. Financial services is among the first sectors to report, with Goldman Sachs and JPMorgan in the pipeline, in addition to consumer company PepsiCo. A Cowen & Co. analyst reiterated her outperform rating on PepsiCo shares in recent days.

The economy has been humming along even better than had been anticipated since the pandemic year. The expectations for S&P 500 companies this earnings season are bullish. Profits are poised to increase 65% vs. year-ago levels, as per Refinitive data, a sign that the pandemic pressure is seemingly in the rearview mirror.

Meme stocks bucked the bullish trend on Friday, though. Barron’s seems to think the meme-stock rally has more fuel left in the tank, based on its latest cover.

AMC Entertainment shaved nearly 4% off its value, while GameStop was down fractionally. Investors also appeared to take some profits in Virgin Galactic, which fell nearly 7% on Friday after Thursday’s blockbuster trading session.

Virgin Galactic is still up approximately 14% in the month of July so far. Richard Branson launched into space on Sunday along with a full crew and returned to Earth without a hitch. Now that space tourism is becoming a reality, demand for Virgin Galactic could potentially increase, though analysts are divided about the stock.

Look Ahead

Investors will be looking to gauge how inflation is looking in the economy when the Consumer Price Index comes out on July 13. Wells Fargo economists are expecting an increase of 0.6% for a 5% YoY rate.

Virgin Galactic Soars as Analyst Pack Separates

Richard Branson has begun the countdown to his Virgin Galactic spaceflight, and he is not the only one that is blasting off. Virgin Galactic’s stock has been on a tear ever since the billionaire entrepreneur revealed that he would be boarding a test flight to space along with a full crew on July 11, beating rival Jeff Bezos to the punch. SPCE shares are up 15% in the month of July so far, including today’s 10% jump as the launch of the spaceflight draws near.

Tug of War

Wall Street firm Cowen is convinced that the good times will continue for Virgin Galactic, now that Branson has pulled a rabbit out of his hat and jumped ahead in the space race. Analysts at the firm have reportedly assigned a USD 51 price target on the stock, more than double the previous target of USD 23. Cowen is looking to 2022, where it has “turned more positive about the prospects of a successful commercial spaceflight program.”

Cowen has reportedly become the most bullish Wall Street firm on SPCE, with analyst Oliver Chen confirming his “outperform” rating on the stock. Chen has long been bullish on Virgin Galactic and started coverage of the stock with a “buy” rating last year. Even then, he had a positive long-term outlook on the prospects for space travel.

Good Times Already Priced In?

Before Branson rescheduled his flight to sooner, Bank of America wrote off Virgin Galactic. The firm downgraded the stock two places from buy to sell after shares shot up to nearly USD 56 in light of the analyst’s price target of USD 41. The stock is currently hovering at just under USD 50.

Bank of America analyst Ronald Epstein said at the time that the good news had already been priced in. Investors, however, are predicting on forums that with a successful flight on Sunday, the stock could have more runway for gains.

Virgin Galactic started to get on the radar of retail investors after it joined the list of meme stocks on the WallStreetBets Reddit forum. The stock has been heavily shorted as the company has yet to generate any revenues and most recently reported a net loss of USD 130 million.

If stocks were still trading on fundamentals, then its market cap of USD 11.8 billion would be alarming. In the era of WallStreetBets, retail investors and meme stocks, however, Virgin Galactic’s lofty valuation is not too farfetched.

Futures Tread Lightly Ahead of Tuesday Trading

There is no indication that investors sold in May and went away. In fact, it’s quite the opposite. The S&P 500, tech-heavy Nasdaq and Dow Jones Industrial Average all climbed to new highs on Friday, placing the bulls clearly in control.

The S&P 500 secured its seventh consecutive all-time high in its longest such stretch in more than two decades. Stocks were buoyed by a better-than-expected jobs report as the economy continues to flex its rebound muscles, adding 850,000 new jobs in June.

Equity index futures were lacking any clear direction on Monday afternoon, suggesting that Tuesday’s market activity could go either way. Dow futures were slightly higher, with the S&P 500 and Nasdaq both modestly in the red.

Stocks to Watch

FAANG stocks all closed higher on Friday, led by Amazon, which was up more than 2%, and Google parent Alphabet, which added close to 2%.

As Amazon founder Jeff Bezos prepares for his upcoming space mission later this month, he is giving up one of his titles. Bezos has relinquished his role as chief executive while his successor, Andy Jassy, is now officially at the helm of the e-commerce giant. Bezos is not out together, and his new title is executive chair. So far the market is celebrating the executive shuffle.

Virgin Galactic is back in favor with investors, climbing 4% higher after founder Richard Branson announced his plans to one-up Bezos and join a fully crewed spaceflight on July 11. The stock experienced about a 50% gain last month, and analysts have been turning more cautious on shares as a result.

Look Ahead

With the stock market closed for a U.S. holiday on Monday, one commodity was moving decidedly higher: crude oil. The price rose above USD 76 per barrel on OPEC-related uncertainty.

Negotiations among OPEC+ members Saudia Arabia and the UAE failed to advance on the topic of oil production in the near term. OPEC+ is poised to bolster production in the coming months, but the UAE is not on board.

On Tuesday, the services sector will be in focus as ISM Services data is released for June. May’s results were solid and the index came in at a reading of 64. For June, Wells Fargo is predicting a slight decline to 63 due to supply constraints.

Investors are also looking ahead to Wednesday when the Fed’s FOMC minutes from its June meeting will be released. The Fed could tip its hand with more details on how it plans to go about tightening monetary policy.

Why Virgin Galactic Stock Is Up By 10% Today

Virgin Galactic Gains Ground As Richard Branson Would Fly Into Space On July 11

Shares of Virgin Galactic opened with a big gap up today after the company announced that its founder Sir Richard Branson would fly into space on Virgin Galactic’s fourth test flight on July 11.

The stock gave up some of the early gains due to profit taking, but it remains up 10% for the day.

Virgin Galactic has also stated that it did not decide to schedule the flight on July 11 to be ahead of Jeff Bezos’ Blue Origin, whose flight will be launched on July 20.

What’s Next For Virgin Galactic Stock?

The near-term dynamics of Virgin Galactic shares will depend on whether the upcoming flight goes without notable problems. It should be noted that the stock will likely remain highly volatile ahead of July 11, and traders should be prepared for fast moves.

If everything goes as planned, the focus will shift to the company’s valuation. Analysts expect that the company will report a loss of $1.41 per share in 2021 and a loss of $0.72 per share in 2022.

Virgin Galactic stated that it had 600 orders priced at $250,000 each, so the company has an order backlog of $150 million. This is not sufficient enough to justify a market capitalization of more than $11 billion, so traders are betting that the market will grow significantly during this decade and that Virgin Galactic will become a market leader.

In the current market environment, traders are hungry for growth stories and are ready to ignore valuation concerns. There are no signs that market mood is changing as S&P 500 is testing all-time high levels. In this environment, Virgin Galactic stock will have a good chance to gain additional upside momentum and move closer to all-time high levels in case its fourth test flight is successful.

For a look at all of today’s economic events, check out our economic calendar.

Richard Branson Onboard. Virgin Galactic’s Shares Up By 28%

The shares of Virgin Galactic are performing excellently at Friday’s pre-market trading session following news that billionaire founder Richard Branson will be onboard its planned July 11 space flight.

Richard Branson Will Be Onboard the July 11 Space Flight

Space tourism firm Virgin Galactic announced yesterday that its founder Richard Branson would be on board its next test flight slated for July 11. The space flight is expected to come nine days before Jeff Bezos flies his space tourism rocket.

According to the company, Branson wasn’t expected to fly its VSS Unity spaceplane for another two tests. However, Virgin Galactic changed its decision and added Branson to the crew of four mission specialists and two pilots.

Richard Branson is excited about this latest development after announcing it via a tweet yesterday. The mission, called Unity 22, will be the company’s fourth crewed test flight of VSS Unity. The spaceplane launches from a carrier aircraft mid-air and goes up towards the edge of space, allowing the passengers on board to experience a few minutes of weightlessness.

The Unity spaceplane is designed to carry a maximum of six passengers and two pilots. It has been tested 22 times so far. Branson is expected to take three more trips with the spaceplane before the end of the year.

Virgin Galactic’s Share Soars By 28%

The news that Richard Branson will be onboard the latest Virgin Galactic spaceplane pushed the company’s stock price higher this morning. Virgin Galactic, trading on the New York Stock Exchange, was up by 28% at Friday’s pre-trading session.

SPCE stock chart. Source: FXEMPIRE

However, at the time of this report, the stock is trading at $43.19, up by 21% over the past 24 hours. The stock price rally could be due to Branson set to beat rival Jeff Bezos to space. Branson said he is looking forward to making more people astronauts, as he plans to make an announcement after the July 11 space flight. The announcement, if positive, could lead to a further rally for the Virgin Galactic stock price.

Today’s Market Wrap Up and a Glimpse Into Friday

Stocks rallied yet again, sending the S&P 500 to its sixth consecutive all-time high. Investors celebrated jobless claims showing that the economy is back on track. Weekly jobless claims came in at their lowest level since the pandemic reared its head.

The Nasdaq also finished higher while the Dow Jones Industrial Average added more than 100 points amid a strengthening economy and a second-quarter earnings parade that is just getting underway.

Energy stocks were a bright spot in the session after WTI crude oil surpassed USD 75 per barrel. Dow member Chevron benefited from the bullish sentiment and tacked on about 1.5%

New in the Hood

The market was abuzz about Robinhood’s IPO filing. The commission-free trading app has been generating revenue hand-over-fist as the retail-investor-fueled meme stock craze has taken shape. Now Robinhood seeks to capitalize on that demand and list on the Nasdaq under a sign-of-the-times trading symbol, HOOD. To demonstrate how popular the app has become, Robinhood generated USD 522 million in Q1 2021 revenue vs. USD 127.6 million in the corresponding year-ago period.

Stocks to Watch

Nike gained 2% on the day after touching on a new all-time high. The sports apparel company turned in impressive sales results and investors expect the momentum to continue.

Walgreens did not receive the same reception on Wall Street even though it also produced a solid quarter. The stock was down 7% in the session despite having lifted its outlook for the year. Investors are still ahead as the stock is up more than 20% year-to-date.

Meme stock AMC Entertainment shed 4% in the session. The stock’s market cap is currently just over USD 27 billion but the company has billions of dollars of debt on its balance sheet. Investors might be starting to think twice about the sustainability of the valuation.

Look Ahead

Investors should keep an eye on Virgin Galactic on Friday.  Billionaire Richard Branson will reportedly head into space on July 11, nine days before rival Jeff Bezos’ space flight. The stock is up more than 4% in extended-hours trading.

On Friday, the much-anticipated Employment Report for June will be released at 8:30 a.m. ET. Wells Fargo predicts that hiring accelerated in June vs. May and that the economy added 750K non-farm payrolls.

Wall Street Analyst Says Virgin Galactic Hype Already Priced In

It’s not easy being a meme stock these days. Just ask Virgin Galatic. After rallying nearly 40% last Friday to its best price since early 2021, the stock has a target on its back and Wall Street is aiming straight for it. Bank of America analyst Ronald Epstein has reportedly downgraded shares of Richard Branson’s company to “sell” from “buy,” skipping over the “hold” rating altogether.

Epstein might have gotten whiplash after seeing shares of Virgin Galactic surpass the USD 41 price target he had on the stock. Last Friday, shares climbed from just over USD 40 to almost USD 56. Epstein believes the space hype is already priced into the stock. That would mean that last Friday’s rally was the encore before the spacecraft left even the earth with passengers.

Meme stocks tend to trade on social media sentiment instead of fundamentals, but the downward notches have taken a toll. The stock is down 1.5% today, extending yesterday’s sell-off.

No Backpedaling

Bank of America is the second Wall Street firm to lower its rating on Virgin Galactic since the company received regulatory approval for passenger flights to suborbital space. Alembic Global’s Pete Skibitski in recent days lowered his rating on the stock from overweight to neutral, blaming a valuation that has “now stretched to excess levels.” The same could be said for the entire meme stock category.

And while the analyst didn’t backpedal, he did leave room to change his mind when Branson’s rocket takes flight, which will most likely be this summer. Skibitski reportedly acknowledged that the trip could be a potential driver of the stock price, suggesting that there might be more runway for gains.

Billionaire Battle

The price turnaround could come sooner than analysts think. Billionaires are a competitive bunch, and Jeff Bezos, who is behind space tourism company Blue Origin, has already slated his flight to take place on July 20. According to reports, Branson is now eyeing liftoff on the weekend of July 4 to beat his rival to the punch. Retail investors on the WallStreetBets forum aren’t expecting Branson to rush his plans.

Investors who are in SPCE for the long term don’t appear to be too worried about the recent profit-taking. In the meantime, Virgin Galactic is sitting on USD 600 million in cash, though it burns through that quickly, given the company’s lofty mission. Morgan Stanley analysts don’t expect Branson’s company to produce positive free cash flow for another seven years even in the best of scenarios. With tickets to space running USD 250K a pop, and hundreds of reservations in the pipeline, this meme stock could have more surprises for Wall Street up its sleeve.

Today’s Market Wrap Up and a Glimpse Into Tuesday

Stocks came out of the gate strong, with the S&P 500 and Nasdaq both setting new record highs, buoyed by Facebook. The social media giant gained more than 4% on the day and is up in extended hours thanks to a court ruling that went Mark Zuckerberg’s way in an antitrust case filed by the FTC.

Today marked the third consecutive all-time high for the S&P 500.  The Dow Jones Industrial Average didn’t join the party and closed the day slightly in the red. Dow member Boeing pressured the index due to a regulatory setback for its 777X aircraft.

Outside of the stock market, cryptocurrencies were in focus after ARK Invest filed with the U.S. SEC for a bitcoin ETF. The bitcoin price has been leading the markets higher all day even before the ETF development. Cathie Wood, who is at the helm of ARK Invest, is also a Tesla bull.

Stocks to Watch

The top three most actively traded companies today were meme stocks.

  • Context Logic topped the list. The stock, which trades under the symbol WISH, gained 2.5% on the day with 175 million shares changing hands vs. the average volume of 46 million.
  • Virgin Galactic, which was last week’s winner, gave back some ground today, falling nearly 2% after its value ballooned by nearly 40% on Friday. The company received regulatory approval for commercial flights to space.
  • AMC Entertainment tacked on 7.5% after enjoying its best weekend for ticket sales since before the pandemic as moviegoers returned to the theaters.

Financials in Focus

  • Morgan Stanley is up 3.4% in after-hours trading after revealing that it would increase its quarterly dividend twofold to USD 0.70 per share as soon as Q3, pending board approval. The investment bank is going for it and also announced a USD 12 billion share buyback program on the heels of the recent stress test.
  • JPMorgan lifted its dividend to USD 1 per share, an 11% increase in the payout.
  • Bank of America is increasing its distribution by 17% to USD 0.21 per share.
  • Goldman Sachs announced a 60% increase to its quarterly dividend to USD 2 per share, up from USD 1.25.

Look Ahead

The markets are also bracing for June’s employment report, which is expected on Friday. In the interim, Richmond Fed President Thomas Barkin will be making comments on Tuesday. The earnings calendar is light.

Virgin Galactic Revisits Multi-Month High, Investors Clamor for More

Retail investors on the WallStreetBets Reddit forum want to know if it’s too late to place a bet on Virgin Galactic. Shares of Richard Branson’s space travel company have skyrocketed by a double-digit percentage today to February highs after aviation regulators gave the go-ahead for commercial flights to space. The FAA’s approval comes on the heels of a successful test run last month.

Most investors on Reddit are kicking themselves for not jumping on this meme-stock bandwagon sooner. Others are reassuring one another, however, that there are likely more gains to come as Virgin Galactic begins scheduling flights. The company is planning more test flights for the summer months. After seemingly being stuck at the USD 53 level, shares have suddenly surpassed the USD 54 threshold, rising 34%. Volume is robust, with 199 million shares changing hands compared to an average of 20.4 million.

Race to Space

The expansion of Virgin Galactic’s operator license to include customers thrusts Branson into the center of a billionaire rivalry, with Jeff Bezos and Elon Musk similarly looking to be first-movers into the space tourism market. Bezos is looking to do so with his company, Blue Origin, while Musk is at the helm of SpaceX. All three of them have been investing heavily in their space companies, and the latest development is quite the coup for Branson.

Short Strategy

Virgin Galactic recently achieved meme-stock status due to a target on its back among short-sellers. The stock has short interest of 22.35% of its free float, according to financial analytics firm Ortex.

In recent weeks, short-sellers lost a combined sum of USD 3 billion after placing bets on a trio of meme stocks — AMC Entertainment, GameStop and Virgin Galactic, according to Ortex data. Options activity is high, with more than 930,000 contracts trading today at last check, three-quarters of which are bullish call options while the rest are bearish puts, as per Market Rebellion data.

The million-dollar question that investors want to know is whether Virgin Galactic will continue to rally on Monday. If the call volume in the stock is any indication, traders expect SPCE likely has some more runway for gains in the short-term, at least. The stock certainly has momentum on its side.

Are Space Tech ETF’s MOON And UFO The 21st Century’s DOT COM Boom?

Disruptive technology and science has become one of the biggest driving forces in global market acceleration over the past 20+ years.  Many of you remember the DOT COM rally and how that technology disruption, even in an infancy stage, dominated market trends. Now, 20+ years later, many of the same technology companies that got started in the late 1990s are global powerhouse technology firms commanding massive price valuations.  Are there other “moonshot” firms out there and, if there are, how can we take advantage of this new disruptive technology today?

My team and I believe one of the biggest and newest technologies that stands a strong likelihood of creating a new industry and disrupting existing concepts is the Space Sector.  Virgin Galactic (SPCE), SpaceX, and Blue Origin are racing to create consumer space solutions including reusable travel, exploration, recreational, and other new industries.  Over time, as this technology continues to provide greater and more varied solutions, just like the late 1990s internet boom, the opportunities for traders could be incredible.

21st Century Disruptive Technology ETF May Present Real Opportunities

Currently, the MOON (Direxion Moonshot ETF) includes various innovative sectors – including the Space sector.  The distribution of this ETF includes Genetic Engineering, Cyber Security, Virtual Reality, Digital Communities, Drones, Distributed Ledger, Robotics, Smart Technology, and many others.  In terms of disruptive technology and the potential for a moonshot return over the next 16+ months, this ETF appears to be uniquely positioned for substantial gains if the current trend continues.

MOON ETF Sector Holdings

This Daily MOON ETF chart highlights the recent upside price rallies that have broken above the downward price trend channel on fairly weak volume.  We believe this upward breakout move may consolidate because of the low volume trend. But we also believe this breakout trend may be the start of a move higher as the global economy transitions towards new disruptive technologies and the opportunities of new consumer space exploration/industries.

One thing to remember about this MOON ETF is that it is somewhat new (less than 12 months since it started), but includes a number of potentially large innovative sectors and symbols.  The opportunities for traders related to this expanding disruptive sector ETF could be impressive over the next 4+ years.

MOON Needs To See Increasing Volume To Sustain A Stronger Rally Phase

This Weekly MOON ETF chart highlights the very mild volume recently within the current uptrend.  We believe a moderate sideways price correction may happen after the recent upside breakout trend which may prompt a new momentum base setup near $34~$35.  If our research is correct, accumulation will start to happen over the next 5+ months in MOON which will setup a new momentum base price level.  From there, a larger upside price rally may prompt a move above $45 to $50.

We would like to see volume levels climb higher as this momentum base nears completion and when the upward price trend really starts to accelerate.  At these lower volume levels, we are starting to see some accumulation from traders, but the volume levels suggest MOON has not reached a true upside momentum rally phase yet.

UFO News Is Hot Right Now.  Are You Ready For The Next Opportunities In Space?

Another interesting ETF for traders to consider is UFO.  This ETF is more focused on space-based technologies and solutions.  Generally, it focuses on anything “space-related” and would be an interesting candidate for traders that truly believe in the long-term disruptive capabilities of the current US and global race to space.

The renewed efforts to turn space into a private and consumer based “new frontier” opens nearly unlimited opportunities to those who are able to find a way to engage and profit from this in the near future.  Obviously, it is not cheap to fly into space and/or engage in any type of profitable enterprises in space.  But, the unknown factor related to raw materials, space mining, broad range exploration and consumer space travel could be something that becomes very real over the next 20+ years.

This Daily UFO chart shows, like the MOON chart does, an upward price trend breakout that supports a new momentum base near $28~$29.  If this trend continues and we start to see volume levels increasing, we may see UFO trading above $33 to $35 before the end of 2021.

Thinking outside the box/planet for a moment – on June 29th, we could have some very interesting news, data, and facts about actual UFOs seen by militaries around the world with a declassified report being released by the Pentagon. Not the most comforting thought as this type of UFO (Unidentified Flying Object) may also include secret drones/planes. This could be headline news over the next month or two and draw some attention to sectors such as Space Tech and ETFs like UFO.

In this article, we have highlighted two unique ETFs that allow traders to engage in disruptive technologies from different perspectives.  The MOON ETF is a more broad-based innovator ETF that includes Terran-based innovators and space technology firms.  The UFO ETF is more exclusively focused on space-related technologies and opportunities.

Traders want to stay ahead of these trends and opportunities related to what may become the next big disruptive technology gains.  As we move further into the 21st Century, it is very likely that space will become the DOT COM/Internet disruptive technology over the next 20 to 40+ years (or longer).  That means traders need to start considering how this exciting new sector fits into their investment portfolio and where new industry leaders will settle.

Learn how my BAN Trader Pro Strategy can help you identify and trade better sector setups.  My team and I built this technology to help us identify the strongest and best trade setups in any market sector.  Every day, we deliver these setups to our subscribers along with the BAN Trader Pro system trades.  You owe it to yourself to see how simple it is to trade 30% to 40% of the time to generate incredible results.

Have a great day!

Chris Vermeulen
Founder & Chief Market Strategist