Space tourism pioneer Virgin Galactic Holdings, Inc. NYSE: SPCE stock has collapsed below pandemic lows after its initial space flight carrying its chairman Richard Branson. What initially seemed like a step forward moving towards significant revenue generation was pushed back as the Company delayed commercial astronaut service to Q4 2022 with ticket prices at $450,000 per seat. The Company is making progress behind the scenes fortifying its infrastructure, technological innovations, and strategy as it sets to emerge stronger during this downtime. Risk-tolerant investors seeking exposure in the space tourism industry with a longer-term horizon can watch for opportunistic pullbacks in shares of Virgin Galactic.
Q3 FY 2021 Earnings Release
On Nov. 8, 2021, Virgin Galactic released its fiscal third-quarter 2021 results for the quarter ending September 2021. The Company reported an earnings per share (EPS) loss of (-$0.32) versus a (-$0.28) loss consensus analyst estimates, a (-$0.04) miss. Revenues were $2.58 million beating estimates of $1.69 million. Adjusted EBITDA was (-$68 million). The Company is on track for commercial flights in Q4 2022. Virgin Galactic CEO Michael Colglazier commented, “We are entering our fleet enhancement period with a clear roadmap for increasing the durability, reliability, and predictability of our vehicles in preparation for commercial service next year,” said Michael Colglazier, Chief Executive Officer of Virgin Galactic. "Demand for space travel is strong, and we've been selling seats ahead of the pace we had planned. This demonstrates the incredible market for our product and appreciation for the value of the unique experience we offer. It's a pivotal time for the Company as we transition from a prototyping space innovator to the global, scaled, commercial operation we are becoming."
Conference Call Takeaways
CEO Colglazier set the tone, “Given the newness of our product, we start by broadly showcasing the awe-inspiring, aspirational value of our experience. And we capture the top of the funnel interest with leading CRM tools. Unity 22 accomplished this in a brilliant fashion and brought tens of thousands of requests for information on our product. After filtering this large demand in highly qualified sales leads, we convert even the signed contracts via one on one sales discussions. We then onboard our new customers into our unique future astronaut community. With regarding sales pace, we plan to onboard new future astronauts ahead of it in conjunction with the growth of our fleet. For the current sales cycle, we are targeting to have our first 1000 future astronauts confirmed by the startup commercial service.
We've tested our sales process over the last 2.5 months with their Spaceport community. As a reminder, this is the group of early hand risers who in 2020 placed a modest, fully refundable deposit of $1000, to reserve the right to be offered reservations when they first became available. It's worth noting that these deposits were made before we announced our updated ticket price. The early sales indicators from this space fair group have been strong. Since September, spaceport purchased approximately 100 seats at our new pricing of $450,000 per seat. Each contract includes a $150,000 deposit, $25,000 of which is non-refundable. We believe these results from a relatively small group that had little pre-qualification showed the incredible strength and appeal of our and our membership community. They also indicate the significant value that people recognize in our product at current price points. We plan to close out sales efforts with our initial space fair group and other early hand-raisers before the holidays, Beginning in early Q1, using a similar filtering process with the more than 60,000 people who originally inquired about flight information, we will offer the remaining slots to become 1 of our first 1,000 astronauts. The overflow demand from this group will be channeled into a new space fair program, whose members will be given first access to the next chance of spaceflights when they are made available. As we've said many times, we know that traveling to space is perhaps the most meaningful journey that can be experienced. Preparation and anticipation, substantially deep in the impact of transformational experiences, which is why Virgin Galactic focuses on the entirety of the journey, not just the space flight. This distinctly Virgin approach offers future astronauts a community with access to unique and exclusive experiences that started the moment of sale, continued during the buildup to the flight, and then extend long after.
He concluded, “As we've said, we are targeting a flight cadence of 400 flights per year per spaceport. To get there, we need to efficiently expand our fleet, and that means growing both our talent base and our footprint. To start, we're investing in a new engineering design and collaboration center. Our design and engineering team has been located at our facilities at Mojave. We have strong roots in Mojave. It has been a great facility for us and we will continue to maintain our presence there, but we also recognize that growing a business requires us to be in locations where we can access additional talent at scale.”
SPCE Opportunistic Pullback Levels
Using the rifle charts on the weekly and daily time frames enables a precision view of the playing field for SPCE shares. Shares peaked at the $21.49 Fibonacci (fib) level on the last stochastic cross-up attempt under the 20-band. The weekly rifle charts have been downtrend since July 2021 with a falling 5-period moving average (MA) at $13.87 followed by the 15-period MA at $17.29. The weekly stochastic has been smothered under the 10-band, with lower Bollinger Bands (BBs) at $7.53. The weekly market structure low (MSL) triggers a breakout through $18.39. The daily rifle chart formed an inverse pup breakdown with a falling 5-period MA at $12.79 followed by the 15-period MA at $13.68. The daily stochastic crossed back down near the 20-band. The daily lower BBs sit at $11.52. Risk-tolerant investors can monitor opportunistic pullback levels at the $10.58 fib, $9.83 fib, $9.36 fib, $8.21 fib, $7.50 fib, and the $6.90 fib level. Upside trajectories range from the $14.00 fib up towards the $21.28 fib level.
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