Virgin Galactic succumbed to gravity on Monday.
The high-flying space travel stock fell 17% to begin the week after it aborted a spaceflight test over the weekend due to technical issues.
But after a nearly 130% rally this year, the trend still points to more upside, Oppenheimer head of technical analysis Ari Wald told CNBC’s “Trading Nation” on Monday.
“What’s most notable is that this 17% drawdown really hasn’t damaged the trend of the stock’s performance that it’s developed through much of the year,” he said. “It’s still above all of its moving averages indicating that this weakness is a function of that strength. Just, this is how it trades with that type of volatility.”
Wald highlighted its breakout at its July closing peak just above $25 as resistance that has now become support. New resistance has formed at its recent high above $33. The stock closed Monday at $26.47.
In the same interview, Boris Schlossberg, managing director of FX strategy at BK Asset Management., said the company’s business needs to expand beyond space travel and prove it can execute it for investors to stick with the stock.
“The true business thesis for Virgin Galactic is not $250,000 vanity flights into space. It’s the promise of suborbital travel from any major airport across the world in about one hour making travel from Asia to North America very, very fast. The problem is the company has yet to make a viable case that they have the technology to achieve this task.”
Until then, the stock remains a “very, very speculative play,” Schlossberg said.
Virgin Galactic will repeat its spaceflight test once it further investigates the issue that grounded the flight on Saturday.
