Virgin Galactic stock SPCE plummeted due to space flight delays

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Virgin Galactic pilots walked to the company’s SpaceShipTwo Unity spacecraft, which was connected to the jet carrier Eve.

Virgin Galactic

Virgin Galactic’s stock price plummeted on Friday after the company said it would postpone any space flight until next year when it refurbished its vehicles.

Although Virgin Galactic hopes to conduct the next space flight in September, the space tourism company changed its plans and decided to start the “enhancement” period of its VSS Unity spacecraft and VMS Eve carrier before flying again. The refurbishment process is expected to take 8 to 10 months, and the company expects to complete it between June and August. Modifying these aircraft will effectively postpone Virgin Atlantic’s next space flight until mid-2022 at the earliest.

Virgin Galactic plans to conduct three more space flights: Unity 23, Unity 24 and Unity 25. Now, its previously announced timetable is uncertain until the renovation is completed. The company stated that its goal is to start commercial services in the fourth quarter of 2022, and it is expected that the Unity 25 mission will represent the service.

Virgin Galactic’s stock price is down 15% from its previous closing price of $24.06. The stock erased 2021 gains and has turned negative so far this year.

Wall Street’s reaction

Bank of America lowered Virgin Galactic’s target price from US$25 to US$20 per share and maintained its underperform rating on the stock. It cited the company’s “increased uncertainty and lack of clarity” surrounding this change.

Bank of America analyst Ron Epstein wrote in a report to clients: “After the recent failure to determine the timing of a relatively well-known short-term event, we are not sure about the company’s ability to predict such future and unknown events. “The company failed to outline how to track progress throughout the enhancement plan and communicate it to the public.”

Canaccord Genuity maintains its target price of US$48 and a buy rating. It told investors that the company believes that Virgin Galactic’s changed schedule will not “significantly” affect the company’s “long-term space travel plan.”

Canaccord Genuity analyst Austin Moeller wrote in a report: “We continue to focus on the enhancement period, which will increase the flight preparation time of VSS Unity to once every 4-5 weeks and increase the endurance of VMS Eve to approximately 100 flights. Flying, which is very important to improve the release rhythm of customers.”.

Similarly, Truist maintains its buy rating and a $50 price target, but tells investors that Virgin Galactic’s adjusted timetable is “equivalent to losing momentum in the space travel race.”

“In the worst-case scenario, we think SPCE may see signs of erosion of its market leadership as the stock price declines,” Truist analyst Michael Ciarmoli wrote in a report. “In our opinion, this delay seems to be irrelevant to the long-term intrinsic value of SPCE.”

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