Virgin Galactic Earnings Don’t Matter. But the Next Big Date for the Stock Is Coming.
VSS Unity Glides Home after Second Supersonic Flight
Courtesy Virgin Galactic
Space tourism pioneer Virgin Galactic reported fourth-quarter earnings Thursday evening. Because the company doesn’t have significant sales yet, earnings for the company don’t matter much. But this report signaled some important developments to come—ones that could finally lead to sales.
Virgin Galactic (ticker: SPCE) ended up reporting a 31 cent loss from no sales. Analysts had projected a loss of 31 cents per share from less than $500,000 in sales.
Galactic, however, is expected to generate sales in 2021, when it begins commercial space tourism operations. Analysts are projecting sales of about $20 million in 2021, growing to $136 million in 2022. With business activity expected to inflect higher this year, details about test flights, aircraft approvals, and demand for space-seats are what investors want to hear about these days.
The company knows that, and focused on development in the earnings release. “We’re focused on completing our test flight program, expanding our fleet of spaceships and motherships, and developing our unique and transformative customer experience,” said CEO Michael Colglazier.
The next rocket-powered space flight is scheduled for May 2021. After that, more flights are planned, including one with cofounder Sir Richard Branson. Management hosts a conference call at 5 p.m. ET to discuss current results, as well as the upcoming flight schedule.
Recent stock trading activity might also be a topic of discussion. Things have been volatile for Galactic shareholders lately. The stock closed down more than 8% Thursday, a difficult day for high-growth stocks. The S&P 500 dropped 2.5%, and the Nasdaq Composite, home to many high-growth technology stocks, slid even more, falling 3.5%.
The stock’s slide, however, doesn’t appear to have anything to do with Virgin Galactic operations. Inflation fears appear to be the main culprit for the selloff.
Higher inflation leads to higher interest rates, which hurt stocks with high valuations more than others. Galactic stock is worth about $10 billion. That’s a big multiple of 2022 estimated sales. The yield on the 10-year Treasury, a crude measure of inflation expectations, traded above 1.5% Thursday—it started the year yielding less than 1%.
Despite the drop Thursday, Galactic stock is still, well, soaring, up 78% year to date.
Galactic shares declined another 10% in afterhours trading. Investors might be uneasy about the development timeline. The conference call might change that dip if management can convince investors things are on schedule.
Write to Al Root at [email protected]
