Shares of Virgin Galactic (SPCE) rose in after-hours trading after the aerospace company reported earnings for its second quarter of Fiscal Year 2024. Earnings per share came in at -$4.36, which beat analysts’ consensus estimate of -$4.98 per share. Sales increased by 125.7% year-over-year, with revenue hitting $4.22 million. This beat analysts’ expectations of $3.341 million.
Looking forward, management expects Q3 2024 free cash flow to land between -$115 million and -$125 million. Although SPCE expects to continue burning cash in the short-term, it does expect to become free cash flow positive by the second half of 2026. In fact, this appears to be a bullish catalyst among analysts, according to TipRanks’ Bulls Say, Bears Say tool pictured below.
However, the bearish arguments wonder if SPCE can scale quickly enough to actually achieve this goal and if there is even enough long-term demand to keep the business alive. In addition, bears are concerned about the company’s low revenue levels relative to the amount of cash it is burning. Usually, investors are willing to overlook losses if a business’ revenue is growing extremely fast on both a percentage and absolute basis. However, both requirements aren’t being satisfied at SPCE, as revenue is still in the low millions.
Is Virgin Galactic a Buy, Sell, or Hold?
Turning to Wall Street, analysts have a Hold consensus rating on SPCE stock based on one Buy, four Holds, and two Sells assigned in the past three months, as indicated by the graphic below. After a 92% decline in its share price over the past year, the average SPCE price target of $36.40 per share implies almost 556% upside potential. However, it’s worth noting that estimates will likely change following today’s earnings report.
