Every day, Wall Street analysts upgrade some stocks, downgrade others, and "initiate coverage" on a few more. But do these analysts even know what they're talking about? Today, we're taking one high-profile Wall Street pick and putting it under the microscope...
New space tourism company Virgin Galactic (NYSE:SPCE) says that after reverse merging into shell company Social Capital Hedosophialast week, it in effect created "the World's First and Only Publicly Traded Commercial Human Spaceflight Company."
To one analyst on Wall Street, that fact alone is reason enough to buy the stock.
This morning, investment banker Vertical Research announced it is initiating coverage of Virgin Galactic with a $20 price target and a buy rating -- the first such Wall Street firm to do so.
Vertical cited two main reasons for endorsing Virgin Galactic. The first is that simple fact that at present, Virgin Galactic is the only pure play on human spaceflight that an individual investor can invest in, anywhere in the world. Sure, there are other ways to invest in spaceflight:
And there are also other pure plays on manned spaceflight, such as Blue Origin or SpaceX -- but neither of those is currently publicly traded.
Virgin Galactic is.
And yet, more than a week after Virgin Galactic began trading on the NYSE, no one else on Wall Street has recommended buying the stock. Why is that?
Investors got a good look at some of those potential reasons last week, when the company filed an 8-K with the SEC describing a few of its key financial metrics.
In that report, Virgin revealed that, for example, it has very little revenue at present -- only about $2.4 million in sales booked over the past six months -- and that it's losing a lot of money as it prepares to begin commercial operations ($96.4 million in net losses accrued year to date).
Of course, this is all probably to be expected.
Already, Virgin Galactic has arguably proven its spacecraft capable of flying well-heeled tourists to the edge of space and returning them to Earth safely. It's taken in some $81.1 million in prepayments from more than 600 would-be passengers. However, Virgin doesn't get to book those payments as revenue until it actually provides the service for which the passengers have paid -- and after pushing its launch date once again last month, the company now says it doesn't expect to begin commercial operation until next year.
In Vertical Research's opinion, this may be the real reason investors have shown themselves to be leery of Virgin Galactic stock: Until the company flies a bunch of tourists to space and brings them back safely, there's going to be a lingering suspicion that itcannot. And perhaps this is the real reason why after Virgin's shares began trading, theyended last week down 18%.
That's a steep hit to take so early in the space game, but as Vertical Research explains today in a note covered by TheFly.com, if what investors are worried about is Virgin's "technical" ability to successfully build and fly a spaceship for space tourism, well, that risk is "less draconian than the stock appears to be pricing in."
Over the past five years, multiple successful test flights since the crash that destroyed the company's first SpaceShipTwo in 2014 have gone off without a hitch. And if Virgin is delaying its first commercial flight a bit longer than investors might like, well, if it's doing this out of an abundance of caution, then that's not something to criticize -- but to applaud.
Mind you, I don't know that I'm 100% convinced that Vertical is right to value Virgin Galactic shares at $20 -- I'm going to need to see proof of the revenue the company can make, and proof that it can be made profitably before I make that call. But as far as the technical risk goes, I agree with Vertical Research on this one:
Virgin Galactic stock at less than $10 looks like a good bet to me -- and I'd bet that as soon as that first commercial flight breaks above the Karman line, shares will go higher.
Read the original:
Virgin Galactic Stock Finds Its First Fan on Wall Street - Motley Fool
- Armadillo’s Level 2 LLC attempt coming soon? - November 8th, 2009 [November 8th, 2009]
- Decisions, decisions - November 8th, 2009 [November 8th, 2009]
- Armadillo versus the weather - November 8th, 2009 [November 8th, 2009]
- Photos from Armadillo’s Saturday flights - November 8th, 2009 [November 8th, 2009]
- Armadillo Level 2 Flight 1 - November 8th, 2009 [November 8th, 2009]
- Meanwhile, elsewhere in the LLC race - November 8th, 2009 [November 8th, 2009]
- Masten gets halfway there - November 8th, 2009 [November 8th, 2009]
- Xombie photos (finally!) - November 8th, 2009 [November 8th, 2009]
- Is the media clowning around? - November 8th, 2009 [November 8th, 2009]
- Galactic Suite “on schedule”? - November 8th, 2009 [November 8th, 2009]
- Scientist Guest Column: Using Commercial Suborbital Spacecraft for Microgravity Chemistry Research - November 8th, 2009 [November 8th, 2009]
- Building Spaceport Infrastructure: An Overview of the STIM-Grants Program - November 8th, 2009 [November 8th, 2009]
- Five Years After SpaceShipOne’s Historic X PRIZE Flight, New Challenges Await - November 8th, 2009 [November 8th, 2009]
- Masten Space Systems Makes Successful Flights to Qualify for $150K NASA Lunar Lander Prize Level 1 - November 8th, 2009 [November 8th, 2009]
- Distinguished Former NASA Astronauts Endorse Commercial Spaceflight in Wall Street Journal Op-Ed - November 8th, 2009 [November 8th, 2009]
- NASA Chief Praises Commercial Spaceflight, Suborbital Science, & Innovation Prizes in Speech - November 8th, 2009 [November 8th, 2009]
- CSF Welcomes Strong Support for Commercial Human Spaceflight in White House Panel’s Report - November 8th, 2009 [November 8th, 2009]
- Commercial Spaceflight Federation President Bretton Alexander Appointed to the NASA Advisory Council - November 8th, 2009 [November 8th, 2009]
- In November 5th Public Ceremony, NASA to Award $1.65 Million In Prizes for Commercial Spaceflight Successes - November 8th, 2009 [November 8th, 2009]
- CSF Congratulates Winners of NASA’s $2 Million Lunar Lander Challenge - November 8th, 2009 [November 8th, 2009]
- Welcome to the NewSpace Journal - December 13th, 2009 [December 13th, 2009]
- Some things even Virgin can’t control - December 13th, 2009 [December 13th, 2009]
- While you’re waiting for the rollout… - December 13th, 2009 [December 13th, 2009]
- SpaceShipTwo rollout: initial impressions - December 13th, 2009 [December 13th, 2009]
- A couple of pics - December 13th, 2009 [December 13th, 2009]
- SpaceShipTwo slideshow - December 13th, 2009 [December 13th, 2009]
- The Virgin party’s aftermath - December 13th, 2009 [December 13th, 2009]
- Investment in Commercial Spaceflight Grows to $1.46 Billion, Updated Industry Study Reveals - December 13th, 2009 [December 13th, 2009]
- Former Astronaut-Astronomer, Sam Durrance, Joins the CSF Suborbital Researchers Group - December 13th, 2009 [December 13th, 2009]
- Commercial Spaceflight Federation Announces Creation and Initial Membership of Spaceports Council - December 13th, 2009 [December 13th, 2009]
- CSF President Bretton Alexander Testifies Before House Science Committee on Spaceflight Safety - December 13th, 2009 [December 13th, 2009]
- CSF Vice-Chairman Jeff Greason Testifies Before House Transportation and Infrastructure Committee on Commercial Spaceflight Regulation - December 13th, 2009 [December 13th, 2009]
- Virgin Galactic Unveils SpaceShipTwo - December 13th, 2009 [December 13th, 2009]
- So that’s why Aabar invested in Virgin? - December 15th, 2009 [December 15th, 2009]
- More about the Virgin rollout aftermath - December 17th, 2009 [December 17th, 2009]
- Space tourism as “the final undiscovered frontier”? - December 17th, 2009 [December 17th, 2009]
- Orion Propulsion acquired - December 17th, 2009 [December 17th, 2009]
- Spaceport America developments - December 18th, 2009 [December 18th, 2009]
- XCOR wins a major customer - December 19th, 2009 [December 19th, 2009]
- Centennial Challenges, Spaceport Infrastructure Grants, and Suborbital Science to Receive Funds from NASA and FAA - December 22nd, 2009 [December 22nd, 2009]
- Video tour of Spaceport America - December 24th, 2009 [December 24th, 2009]
- Virgin’s web traffic planning - December 24th, 2009 [December 24th, 2009]
- List of Speakers Announced for the Next-Generation Suborbital Researchers Conference in February - December 31st, 2009 [December 31st, 2009]
- Popular Science Features Commercial Spaceflight on January Cover, Discusses NASA Partnerships - January 4th, 2010 [January 4th, 2010]
- Aviation Week honors the “Space Entrepreneur” - January 5th, 2010 [January 5th, 2010]
- “The Space Entrepreneur” Named by Aviation Week Magazine As Its 2009 Person of the Year - January 5th, 2010 [January 5th, 2010]
- Additional notes about Olsen’s book - January 6th, 2010 [January 6th, 2010]
- Registration deadline approaching for suborbital science conference - January 8th, 2010 [January 8th, 2010]
- NASA Deputy Administrator Lori Garver to Keynote the Next-Generation Suborbital Researchers Conference in February - January 11th, 2010 [January 11th, 2010]
- Cecil Field gets spaceport license – but will anyone use it? - January 12th, 2010 [January 12th, 2010]
- Training begins for suborbital scientist-astronauts - January 12th, 2010 [January 12th, 2010]
- First Class of Suborbital Scientist-Astronauts Successfully Complete NASTAR Training Program - January 14th, 2010 [January 14th, 2010]
- Is “space tour guide” in your professional future? - January 17th, 2010 [January 17th, 2010]
- What can Florida, Indiana, and others learn from Oklahoma? - January 17th, 2010 [January 17th, 2010]
- Virginia wants money, New Mexico wants laws - January 21st, 2010 [January 21st, 2010]
- Commercial Spaceflight Federation Responds to the Aerospace Safety Advisory Panel’s 2009 Annual Report - January 21st, 2010 [January 21st, 2010]
- CSF Statement on NASA’s Anticipated Announcement of a $6 Billion Commercial Crew Program and NASA Budget Increase - January 29th, 2010 [January 29th, 2010]
- CSF Welcomes New NASA Human Spaceflight Plan, Congratulates Commercial Crew Development Winners - February 1st, 2010 [February 1st, 2010]
- NASA Unveils Commercial Human Spaceflight Development Agreements and Announces $50 Million in Seed Funding for Commercial Crew - February 3rd, 2010 [February 3rd, 2010]
- James Cameron Endorses Commercial Spaceflight, New NASA Plan - February 4th, 2010 [February 4th, 2010]
- Newt Gingrich and Bob Walker Endorse Obama’s New NASA Plan, Urge Bipartisan Support - February 13th, 2010 [February 13th, 2010]
- Blue Origin proposes orbital vehicle - February 18th, 2010 [February 18th, 2010]
- CSF Announces New Research and Education Affiliates Program, Initial Participating Universities - February 18th, 2010 [February 18th, 2010]
- CSF Welcomes Historic NASA Commitment of $75 Million for Commercial Suborbital Flights, Payloads - February 18th, 2010 [February 18th, 2010]
- Suborbital vehicle development updates - February 19th, 2010 [February 19th, 2010]
- Other conference announcements - February 21st, 2010 [February 21st, 2010]
- Bigger prizes to come? - February 23rd, 2010 [February 23rd, 2010]
- Gov. Bill Richardson Endorses Commercial Spaceflight, Obama’s New NASA Plan - February 23rd, 2010 [February 23rd, 2010]
- Over 250 People Attend Next-Gen Suborbital Researchers Conference, 2011 Meeting Planned for Florida - February 24th, 2010 [February 24th, 2010]
- Boston Globe, Nature, New York Times Editorial Boards Among Others Welcoming New NASA Plan - February 25th, 2010 [February 25th, 2010]
- Commercial Spaceflight Federation Commends New Mexico for Passage of Key Liability Legislation - March 2nd, 2010 [March 2nd, 2010]
- Burt Rutan’s BigThink - March 3rd, 2010 [March 3rd, 2010]
- Brief notes: Soyuz, Virgin, and… iCarly? - March 5th, 2010 [March 5th, 2010]
- Commercial Spaceflight Federation 2009 Annual Report Highlights Industry Progress - March 8th, 2010 [March 8th, 2010]
- SpaceShipTwo flies, on schedule - March 23rd, 2010 [March 23rd, 2010]
- SpaceShipTwo captive carry flight video - March 23rd, 2010 [March 23rd, 2010]
- Over the Mojave Desert, Suborbital Vehicles Take Flight - March 28th, 2010 [March 28th, 2010]
- See WK2 and SS2 fly in New Mexico this October - March 29th, 2010 [March 29th, 2010]
- SA10: Commercial RLV Technology Roadmap update - April 9th, 2010 [April 9th, 2010]
- An evolving Armadillo - April 11th, 2010 [April 11th, 2010]