Shares of aerospace and space travel company Virgin Galactic (NYSE:SPCE) are in focus as the stock begins trading on a split-adjusted basis today. SPCE announced a 1-for-20 reverse stock split last week.
The Stock Split
The reverse stock split was aimed at increasing Virgin’s share price, ensuring compliance with the NYSE’s minimum share price norms for continued listing. Virgin’s move comes after its share price slumped from $56 in June 2021 to as low as $0.68 last week.
Why Are SPCE Investors Worried?
Virgin has achieved key milestones in its space travel endeavors, yet its weak financials remain a key cause of concern for its investors. The Richard Branson-founded company is retiring its VSS Unity suborbital spaceship after 12 spaceflights over a six-year period. Virgin is now focusing on the development of its fourth-generation Delta-class space vehicles. This transition means no spaceflights from Virgin for quite some time. The first commercial flight of its Delta vehicle is targeted for 2026.
The Importance of Virgin’s Delta Ships
Meanwhile, Virgin’s revenue for the quarter ended March 2024 stood at just $1.99 million. In comparison, its net loss stood at $102 million, and free cash flow was at -$126.3 million. This means the company will have to achieve a delay-free development of its Delta vehicles and operate them at a higher frequency than the Unity vehicles, to get its financials back on track. Notably, Virgin is developing its Delta spaceships to be capable of executing eight spaceflights per month, with 12 times the monthly capacity of its VSS Unity vehicles.
Is Virgin Galactic a Buy, Sell, or Hold?
Overall, the Street has a Hold consensus rating on Virgin Galactic, alongside an average SPCE price target of $1.84. However, analysts’ views on the stock could see a revision following its reverse stock split.
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