24/7 Insights

• By one measure, Wall Street expectations for where Virgin Galactic Holdings Inc. (NYSE: SPCE) stock is headed are wildly optimistic.
• However, there is plenty that undercuts that enthusiasm.

Virgin Galactic Holdings Inc. (NYSE: SPCE) recently effected a 1-for-20 stock split in order to retain its listing on the New York Stock Exchange. That split failed to boost the share price, though. But in the past week or so, there is some sign the stock might have bottomed. Opinions about the stock and company vary greatly. So, shareholders and would-be investors must be wondering where the stock could be headed.

Why Invest in Virgin Galactic?

With one-time meme stock Virgin Galactic trading not far above an all-time low, why would investors be interested? The company claims to be the world’s first commercial spaceline, with a mission to make space travel more accessible and to inspire future generations. Just in the past year, it began regular space tourism flights, but now it is focused on developing a next-generation vehicle. For optimistic investors, the company’s prospects for growth look promising. Does Wall Street agree? Do analysts see it soaring back to its all-time above $1,000 a share? Let’s take a look.

Virgin Galactic, the Company

This aerospace and space travel company is focused on the development, manufacture, and operation of spaceships and related technologies. The company engages in the design and development, manufacturing, ground and flight testing, spaceflight operation, and post-flight maintenance of spaceflight systems for private individuals, researchers, and government agencies.

Virgin Galactic is based in Tustin, California. It was founded in 2004 by British magnate and billionaire Richard Branson and his Virgin Group. It went public in October of 2019. Competitors include BlueOrigin, Rocket Lab USA Inc. (NASDAQ: RKLB), and SpaceX, as well as aerospace giants like Boeing Co. (NYSE: BA).

Virgin Galactic just completed a new manufacturing facility in Arizona, and it recently completed its 12th spaceflight. It also had the aforementioned reverse stock split. In its quarterly report last May, the net loss was narrower than expected and revenue was rising.

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Virgin Galactic, the Stock

The share price is over 84% lower than at the beginning of the year, but the retreat may have taken a breather in the past week or so. The S&P 500 is up more than 17% year to date. Note that the consensus price target is well above the current share price but well short of the 52-week high.

Out of 11 analysts who cover the stock, only two recommend buying shares. Goldman Sachs maintained a Neutral rating and Morgan Stanley maintained its Underweight rating recently. More than 40% of shares are held by institutional investors, including notable stakes at State Street, Vanguard, and BlackRock. Note that 28% of the float is held short, and the stock remains a popular WallStreetBets pick.

Judging by price targets, Wall Street expectations for where the stock goes in the next 52 weeks are very high. Even the lowest target sees the stock doubling. But even the highest target is nowhere near the stock’s meme-stock highs.

Low target	$15.00	98.2%
Mean target	$39.13	402.9%
High target	$80.00	928.3%

That apparent enthusiasm is offset by the sizable short interest, the popularity among the meme stock crowd, and simply the ongoing questions about whether the stock and the company are sustainable. Even Wall Street sentiment is largely pessimistic, given the consensus recommendation to hold shares.

Be sure to grab a copy of our “The Next Nvidia” report if you are looking for more great stock ideas.

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