Published -June 23th, 2023 @ 1:30 PM (GMT+2)
Virgin Galactic's Updated Launch Targets and Stock Rally
Virgin Galactic's (NYSE:SPCE) stock has recently surged by approximately 50% in the past three trading days due to updated commercial launch targets, which are now expected later in June. However, this development may have a short impact on the stock's performance, as concerns regarding the company's financials and the absence of a viable business model persist.
The Absence of a Viable Business Model
Virgin Galactic's lack of a viable business model is a significant concern for investors. While the company offers a unique spaceflight experience, it has struggled to generate revenue and build a substantial customer base. With losses amounting to hundreds of millions of dollars and limited progress in selling tickets, the stock's bearish outlook remains unchanged.
Continuous Losses and Financial Challenges
Virgin Galactic's consistent losses and diminishing financial resources pose a risk to shareholders. The company has accumulated significant net losses, with a net loss of approximately $159 million reported in the most recent quarter. With limited cash reserves and reliance on debt and equity issuance, existing shareholders face the possibility of substantial dilution.
Analysts' Take on SPCE Stock
Analysts' consensus on Virgin Galactic's stock leans toward a Moderate Sell rating, with expectations of a 36.6% downside potential based on the average stock price target. Investors looking for guidance may consider following Ronald Epstein from Bank of America Securities, known for his accuracy in covering the stock.
Final Thoughts and Cautionary Outlook
Despite the recent stock rally driven by updated commercial launch targets, Virgin Galactic's long-term prospects remain uncertain. The absence of a viable business model, continuous losses, and financial challenges make it advisable to approach the stock with caution.
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